21 May 2024
Dowlais Group
plc
Trading
update
Start of the year broadly in
line with expectations: Driveline, China and Powder Metallurgy
growth ahead of market, ePowertrain challenged by BEV market
volatility
Dowlais Group plc ("Dowlais" or the
"Group"), the specialist engineering group focused on the
Automotive sector, provides a trading update for the four-month
period to 30 April 2024 ("the period") ahead of its Annual General
Meeting to be held later today.
The Group has continued to execute
well on its strategic priorities, with continued focus on
delivering operational efficiencies, amidst challenging market
conditions.
The Group delivered £1.7 billion of
adjusted revenue1 in the period, a year-on-year decline
of 1.9%2, as revenue growth ahead of the market in
Powder Metallurgy, Driveline3 and our China joint
venture (JV) was more than offset by weakness in the
ePowertrain4 product group of the Automotive business.
Translational foreign exchange headwinds were £90 million,
resulting in a year-on-year reported adjusted revenue decline of
6.6%. Encouragingly, despite market volatility, adjusted operating
margins of 6.1% in the period were up 30bps2 over the
same period of the prior year, with margin expansion achieved in
both Automotive and Powder Metallurgy.
Business Unit performance
Automotive
In the period, Automotive saw
year-on-year adjusted revenue decline of 3.3%, as growth in
Driveline and China was more than offset by revenue decline in
ePowertrain. The Driveline product group continued to perform well,
with revenue growth ahead of the market5, benefitting
from its broad portfolio and scale across customers, platforms and
geographies. ePowertrain adjusted revenue declined largely driven
by increased volatility in BEV production volumes. Revenue from our
China JV operations grew slightly ahead of the Chinese
market6 as it continued to gain market share with local
OEMs. Adjusted operating margins further improved, driven by
the recovery from customers of inflationary costs incurred in the
prior year as well as ongoing performance initiatives.
Year-to-date new business bookings
are in line with expectations, balanced across a mix of platforms
and continue to underpin expectations for long term profitable
growth.
Powder Metallurgy
Powder Metallurgy had a strong start
to the year, with year-on-year adjusted revenue growth of 4.0%,
outperforming the market. Revenue growth was driven by improved
performance in its ICE related business, as it benefitted from
restocking in the period, and growth in the non-ICE related
portfolio. Adjusted operating margin improved, driven by the
additional volume and improved performance in the North American
sites.
Outlook
Overall, the Group has started the
year broadly in line with expectations despite the increased
volatility of production schedules for certain BEV platforms which
have impacted the ePowertrain product group. While current industry
forecasts expect an improvement in the second half, after a weak
first half, some uncertainty remains. Consequently, the Group
anticipates revenue for 2024 to be slightly below prior year at
constant currency, with performance more weighted to the second
half. Based on these assumptions the Group remains confident in its
ability to achieve operating margin expansion and grow free cash
flow for the full year.
The Group's interim results will be
announced on 13 August 2024.
Liam
Butterworth, CEO of Dowlais, said:
"This performance demonstrates the resilience
of Driveline, whose powertrain agnostic characteristics and broad
diversification make it well placed to succeed. I am also
encouraged by the strong performance of our JV in China, where we
grew ahead of the market and of Powder Metallurgy. These successes
were tempered by challenges in the ePowertrain product group. We
achieved a 30bps increase in our adjusted operating margins, driven
by retrospective recoveries and ongoing performance initiatives.
Our teams continue to capitalise on opportunities as we remain
focused on delivering shareholder value."
Enquiries
Teneo:
Olivia Peters/Harry
Cameron
dowlais@teneo.com
+44 (0) 7902 771008
Investor Relations:
Pier Falcione
investor.relations@dowlais.com
+44 (0) 7974 974690
Dowlais Group plc LEI Number:
213800XM8WOFLY6VPC92
Notes
1 All
"adjusted" financial measures in this trading update are defined in
the Alternative Performance Measures section of Dowlais full year
2023 results announcement, published on 21 March 2024
2 This
and all other prior period comparators in this trading update are
expressed on a constant currency basis, eliminating the impact of
translational foreign exchange movements
3
Sideshafts and propshafts
4 All
wheel drive systems, ePowertrain components and eDrive
systems
5 Based
on April Forecast (excluding China market) by S&P
Global
6 Based
on the April forecast (China only) by S&P Global
Forward-Looking Statements
This trading update includes certain
forward-looking statements. These forward-looking statements
involve known and unknown risks and uncertainties, many of which
are beyond Dowlais' control and all of which are based on Dowlais'
current beliefs and expectations about future events.
Forward-looking statements are sometimes identified by the use of
terminology such as "believe", "expects", "may", "will", "would",
"could", "should", "shall", "risk", "intends", "estimates", "aims",
"plans", "predicts", "goal", "continues", "assumes", "positioned",
"anticipates" or "targets" or the negative thereof, other
variations thereon or comparable terminology. These forward-looking
statements include matters that are not historical facts,
statements regarding the intentions, beliefs or current
expectations concerning, among other things, the future results of
operations, financial condition, prospects, growth, strategies, and
dividend policy and industry of Dowlais. These forward-looking
statements and other statements contained in this trading update
regarding matters that are not historical facts involve
predictions. No assurance can be given that such future results
will be achieved and actual events or results may differ materially
as a result of risks and uncertainties facing Dowlais. Such risks
and uncertainties could cause actual results to vary materially
from the future results indicated, expressed or implied in such
forward-looking statements. Forward-looking statements contained in
this trading update speak only to the date of this trading update.
Dowlais and its directors expressly disclaim any obligation or
undertaking to update these forward-looking statements to reflect
any change in their expectations or any change in events,
conditions, or circumstances on which such statements are based
unless required to do so by applicable law.