Pdf
Aeroplane engine

Efficient
and durable

Honeycomb seals

Honeycomb, a structure borrowed from nature, provides an excellent strength to weight ratio when used in manufacturing applications. In aircraft engines, honeycomb seals are critical to the efficiency of gas flow through the engine, and to providing a sacrificial wear surface, protecting turbine blades as they respond to high operational temperatures. This double role performed by the honeycomb seal results in better fuel efficiency and longer service life of turbine blades. To join the honeycomb seals, a form of metal joining, called brazing, is used. Bodycote has decades of experience providing this complex and specialised service.

Engine element
Checking engine element

The ADE Divisions

ADE revenue by market sector and geography

£m

ADE revenue by market sector and geography chart

Market sector

  • Aerospace and Defence150.5
  • Energy47.0
  • Automotive9.8
  • General Industrial65.8
  • Total273.1

Geography

  • Western Europe126.0
  • North America145.7
  • Emerging Markets1.4
  • Total273.1

Bodycote has more than 180 facilities around the world which are organised into customer focused divisions; the ADE divisions and the AGI divisions. Our ADE customers tend to think and operate globally and our ADE divisions are organised globally as a result.

A large number of Bodycote's multinational customers fall within our ADE divisions and Bodycote intends to continue to leverage its unique market position to increase revenues in the aerospace, defence and energy sectors. We have 63 facilities around the world including hot isostatic pressing (HIP) and surface technology facilities alongside our classical heat treatment plants.

The following review reflects constant currency growth rates unless stated otherwise.

Revenue in 2017 was £273.1m, an increase of 4.7% (8.8% at actual rates), including a contribution of 0.8 percentage points to the growth from new facility investments. Civil aviation growth was underpinned by a strong UK performance. It was also notable that growth in North American civil aviation revenues picked up through the year. The revenues from onshore oil & gas in North America increased sequentially through the year. These two factors helped the ADE divisions achieve revenue growth of 7.2% in the second half of 2017 against 2.1% in the first half.

Headline operating profit1 was £64.2m, an increase of 11% (15% at actual rates), benefiting from positive operational leverage as revenues grew. Accordingly, return on sales improved to 23.5% (2016: 22.2%). Statutory operating profit grew to £62.7m (2016: £54.1m).

Net capital expenditure in 2017 was £32.1m (2016: £19.9m), representing 1.5 times depreciation. In addition to the new mega-HIP acquired for our European business, our new aerospace facility in Poland opened in 2017 and we commenced investment in a new UK facility to support our growing UK civil aviation business.

Return on capital employed increased to 21.4% (2016: 19.7%), reflecting the improved profitability and careful management of the balance sheet.

  1. Headline operating profit is reconciled to operating profit in note 2 to the financial statements. Bodycote plants do not exclusively supply services to customers of a given market sector (see note 2 to the financial statements).