Bodycote [BOY] has blamed supply chain bottlenecks for its 6% drop in automotive revenues, explaining that it experienced a 10% decline in its car and light trucks business, which more than offset the good growth it saw in its heavy truck and bus division.
The leading provider of heat treatment and specialist thermal processing services reflected on its financial results for the period 1 July to 31 October 2021 in a trading update released today, highlighting that most of its poor growth came from emerging markets.
“Whilst the decline is greater than we had anticipated, it has been concentrated almost entirely in our North American and Mexican businesses, driven by automotive original equipment manufacturers’ (OEMs) supply chain shortages.”
The company’s revenue for the period was £200.1m ($268) – 3% higher than last year. It reported group revenue for the 10 months to 31 October at £513m – also 3% up on last year.
But Bodycote highlighted that it could no longer rely on Q4 revenues to rebound after a Q3 decline.
It said in the update: “We no longer believe that our Q4 revenues can offset the Q3 decline. Consequently, we now expect that our full year group revenue will be up to £10m (1.6%) lower than our previous expectations as a result of lower automotive revenues.”
Aerospace revenue boost
In contrast, its aerospace revenues were up 25% compared to the same period last year. The company said activity was picking up due to OEMs ramping up production and an increase in flying hours.
The company said this acceleration in growth was in line with its expectations for its aerospace business in 2022 and beyond.
Earlier this year, Bodycote reported a fall in revenue for the first four months of the year, blaming the impact of Covid-19 on its aerospace and defence business.
Fall in Mexico revenue
Meanwhile, the company’s emerging markets business achieved a mere 4% increase in revenue growth.
Bodycote said this was due to poor performance in Mexico, which largely supplies the automotive market in the US and experienced a 50% drop in revenue from this time last year.
At 13:00 UTC, Bodycote’s share price was up 5.14%, trading at 879.5p.
Read more: Bodycote reports fall in early-year revenue
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