REG-Bodycote PLC: Trading Update

TRADING UPDATE

EMBARGOED UNTIL: 0700 HOURS FRIDAY 10 JULY 2009

Bodycote is providing the following trading update ahead of its interim results
announcement on 29 July 2009.

Trading

As has been widely reported, industrial output has continued to decline
globally. In European economies, such as Germany and Sweden, where automotive,
capital goods and general industrial activities predominate, the impact for
Bodycote has been significantly greater than in countries which also have
substantial aerospace and power generation activity, notably the UK and USA. As
announced in the IMS on 27 April 2009, the automotive sector has seen some
recovery but from very low levels. Capital goods and general industrial demand
appears to have stabilised but aerospace and oil & gas demand has continued to
soften.

Consequently, revenue for the continuing business (post the sale of the Testing
division) for the six months to 30 June 2009 is 20% below the same period last
year. On a constant currency basis, revenues for the continuing business are
down 31%. As a result, the Board expects to announce a marginal operating loss
before exceptional items for the half year.

Restructuring

The actions agreed and provided for in 2008 continue to be executed in line
with our expectations. Additional restructuring actions in South America and
Europe have now been put in place, together with further cost cutting measures
over and above those anticipated at the time of the IMS. Details of the cash
cost of all these additional actions, the associated asset write downs, and the
incremental cash savings will be given at the time of the interim results.

Financial Position

Bodycote has a strong balance sheet and continues to focus on reducing capital
expenditure and effective working capital management. Reflecting this, there
was a positive operating cash flow in the first half. As at June 30 net
borrowings stood at £89m, having paid £23m, as expected, in settlement of tax
liabilities related to the sale of the Testing business and having paid the
final dividend for 2008 (£10m) in May instead of July as was the previous
practice.

Outlook

There has to date been some modest improvement in auto demand from the very
depressed levels seen in the early part of the year but customer summer
shutdowns are expected to be longer than those of last year. Aerospace and oil
& gas demand continues to soften. The wide-ranging restructuring plans that are
being actioned are already delivering material cost savings and these will
increase as the year progresses. As a consequence of our short order book and
continuing uncertainty in market conditions visibility is very limited, but if
demand remains at its current depressed levels the Board would anticipate the
outcome for 2009 being materially below recent market EBIT consensus (£24m).

For further information, please contact:

Bodycote plc Tel No: +44 (0)1625 505300

Stephen Harris, Chief Executive

David Landless, Group Finance Director

Financial Dynamics Tel No: +44 (0) 20 7831 3113

Jon Simmons

END