Income investors will be relieved that another long-standing dividend has not gone to the pandemic dogs after Bodycote (BOY) maintained its 30-years plus payout record.

The engineering company proposed a 19.4p per share dividend for 2020 despite the intense pressure placed on the business by the Covid outbreak. This was particularly true on its aerospace side, which saw hundreds of jobs axed last year.

The company paid a 19.3p dividend in 2019, and the 2020 payout implies a 2.4% income yield after the stock drifted 0.8% lower to 795.5p.

BATTERED BY AEROSPACE

Bodycote supplies a range of specialist testing and thermal processing equipment and services to various industries, with aerospace one of its key markets. Aerospace revenues plunged 29% last year, while automotive (down 20%) and general industrial (minus 11%) also massively impacted performance.

That saw overall sales fall 16.9% to £598 million, plunging the FTSE 250 company into the red. The engineer ran-up a pre-tax loss of £1.5 million having reported £123.9 million profit in 2019, after £58.4 million of exceptional charges, including £35.7 million of restructuring costs.

Operating margins fell by a third, from 18.7% to 12.6%, although cash generation stayed typically strong, with Bodycote producing £106 million of free cash flow, or 141% conversion of £75.3 million operating profit.

OPTIMISTIC PROSPECTS

The company flagged ‘recovering’ markets as it looked to the future although admitted that huge clouds remain over parts of the business, such as civil aerospace.

‘Our restructuring programme is now largely complete, resulting in a higher quality business aligned to the growth opportunities we are seeing,’ said Stephen Harris, the chief executive.

‘The board is confident that Bodycote is well placed to drive growth and take advantage of the upturn in activity across all of its markets as they strengthen,’ he concluded.

READ MORE ABOUT BODYCOTE HERE

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Issue Date: 12 Mar 2021