2nd UPDATE: Bodycote Shares Up Sharply; 2010 Earnings To Beat Views

9th Jul 2010 11:40

(Adds executive comment) By Hannah Benjamin and Jason Douglas Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Shares in Bodycote PLC (BOY.LN) rose sharply Friday after the engineer said 2010 earnings will be significantly ahead of market forecasts. Bodycote, which specializes in heat treatment to improve the wear resistance of metals, said it has experienced a steady and broad-based improvement in demand since April and revenue for the first six months of the year is expected to be 8% higher than the same period in 2009. Group Finance Director David Landless told Dow Jones Newswires demand from the automotive sector and industrial customers has been good, buoyed by the same pick-up in demand for cars and light trucks Bodycote highlighted in an April update to shareholders. He added demand from the aerospace sector is mixed. Demand for Bodycote's products and services from manufacturers is robust but demand for maintenance services is weaker, as airlines have fewer planes in the air. Bodycote's products and services are used in the manufacture and maintenance of turbine blades, for example. Its heat treatment technology is also used on machinery used to drill for oil. Landless said demand from this sector is strong. Landless said overall demand remains uncertain and could be uneven, due to lingering uncertainty about the health of the global economy. But Bodycote added that if current levels of demand are sustained in the second half of 2010 then it expects operating profit for the year to be significantly above analysts' highest estimates. Analysts' 2010 operating profit forecasts range from GBP27.2 million to GBP34.7 million, Bodycote said. The company added its earnings are benefiting from a restructuring program it began in late 2008. The company shut factories, laid of staff and closed down some production lines to deliver savings of GBP30 million in 2009. Another GBP43 million of savings are expected in 2010, Bodycote said in its 2009 annual report. At 1026 GMT, shares in Bodycote were up 22.3 pence, or 12%, at 213 pence, outperforming a 0.3% higher Dow Jones U.K. Smaller Companies index. The stock has gained almost 30% since the start of the year. Analysts at brokerage Investec said they intend to upgrade their 2010 earnings forecasts by 35% and their 2011 forecasts by 15%. However, they maintained a "hold" rating, saying they will review their recommendation after Bodycote publishes its interim results. "But our view is becoming more positive," they added. -By Hannah Benjamin and Jason Douglas, Dow Jones Newswires; 44-20-7842-9272; [email protected] (END) Dow Jones Newswires July 09, 2010 06:40 ET (10:40 GMT)