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Bodycote Eyes North American Purchases to Coat Jet, Energy Gear

Bodycote Plc, a supplier of metal- strengthening services to Ford Motor Co., is considering acquisitions in North America to be closer to customers, Chief Executive Officer Stephen Harris said.

The company, which made no purchases in 2010, is eyeing coatings businesses that cater to the region’s aviation and energy customers, Harris said in a telephone interview today. Bodycote has more than 200 million pounds ($323 million) of available credit lines, said Chief Financial Officer David Landless, who was also on the call.

Net debt fell to 51.3 million pounds from 85.5 million pounds during 2010, the Macclesfield, England-based company said in a statement today. Net income in 2010 was 27.6 million pounds, compared with a net loss of 50.1 million pounds the previous year.

“Acquisitions will be a source of growth,” Harris said. The company is looking for both “fairly small in-fill acquisitions and larger acquisitions in niche technologies,” he said. Smaller purchases will help in providing services such as heat treatment to its automotive and general industrial customers, the executive said.

Larger acquisitions would involve technologies such as spraying ceramic materials onto turbine blades for jet engines or drill bits for shale-gas drilling, part of the company’s surface-technology business, he said.

“That technology is something we already have,” Harris said. “We’d like to be bigger in it because our customers say ‘can you please bulk up because we’d like to do business with you in other countries.’”

He declined to name any potential targets, saying “there’s nothing on the radar screen at the moment.”

Close to Customers

Bodycote’s factories in those activities are largely in Britain, and North American customers would rather have the work done nearby, Harris said. “You get a part stuck in customs for five days and that stops the build of a complete engine,” he said. “They don’t like that.”

The company’s largest business in aerospace comes from widebody commercial jets, Harris said. Production of those planes “is projected to be very high, certainly by the time you get to 2013 or 2014,” the CEO said. “The worry in the industry is: Is there the capacity in the industry as a whole to meet the demand everybody is expecting?”

Airbus SAS said on Feb. 2 production of its A330 twin-aisle jet will rise to 10 a month by mid-2013, from eight now, to satisfy “unprecedented” demand. It had about 1,100 orders on that date. Boeing Co. has 847 orders for its Dreamliner 787 jet, due to be in service by the third quarter of this year.

“We’ve got capacity to grow and we’re confident we’ll be able to support all our aerospace customers,” said Landless, the finance chief. Customers include Rolls-Royce Group Plc, General Electric Co. and United Technologies Corp.’s Pratt & Whitney unit.

“Rolls-Royce are certainly beseeching us to make sure that we’re ready for increases in their demand over the medium term,” Landless said.

To contact the reporter on this story: Howard Mustoe in London at hmustoe@bloomberg.net.

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

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