Bodycote PLC (LON:BOY) shares jumped on Friday after the FTSE 250-listed group announced plans for a special dividend as the metal heat treatment engineer posted a 12% increase in pre-tax profit for 2018.
In the year to 31 December 2018, the company's headline pre-tax profit rose to £136.4mln, up from £121.5mln in 2017, as revenue increased 5.6% to £728.6mln, led by growth in the specialist technologies, emerging markets and civil aviation divisions.
The group improved its return on sales to 19% from 18% a year ago as it took a disciplined approach to pricing due to cost pressures, including higher input cost inflation, tighter labour markets and an increase in the price of utilities and industrial gases.
Free cash flow edged up 17% to £97.4mln after capital expenditure of £44.1mln as the company invested in expanding capacity.
Bodycote said it is recommending a special dividend of 20p per share along with an ordinary dividend of 19p, up 9% on the previous year.
"While we are conscious of the global macro-economic backdrop, we have entered 2019 well positioned and at this early point in the year, our expectations for 2019 remain unchanged,” said the group's chief executive Stephen Harris.
In a note to clients, analysts at UBS pointed out that Bodycote’s 2018 results were in-line with its estimates, showing resilience in markets adversity.
UBS reiterated a ‘buy’ rating and 814p price target on Bodycote shares, which in late morning trading were 7.4% higher at 837.50p.
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