Bodycote eyes axe as profits plunge

BODYCOTE International may shut factories as part of a cost-cutting drive forced by continued weak market conditions. The engineering group, posting profits in line with City forecasts, said it was reviewing its underperforming plants. It also expected analysts to cut their profit forecasts for this year.

The firm's heat treatment plants strengthen manufactured parts such as jet-engine turbine blades. Demand had softened in the second half of last year, particularly after 11 September, it said. Chairman James Wallace said there were some tentative signs of recovery in its main markets. 'However, the timing of the recovery is impossible to predict and is crucial for the outcome for the year,' he added.

'The board is evaluating a number of further cost saving initiatives and anticipate that measures taken and to be taken will improve underlying profitability though these benefits will be offset by associated rationalisation costs.'

Profits fell to £66.3m from £80.1m, before tax, one-offs and goodwill amortisation. It warned on profits in December followed disappointing trading, particularly in its North American businesses.

The City is currently predicting profits of £53m-£85m for this year, with consensus at £66m. 'I think those (forecasts) at the higher end of the range will be downgraded,' said finance director David Landless.