13 November 2024
Dowlais Group
plc
Trading
update
Performance in line and full
year outlook unchanged
Dowlais Group plc ("Dowlais" or the
"Group"), the specialist engineering group focused on the
Automotive sector, provides a trading update for the ten-month
period to 31 October 2024 ("the period").
The Group has delivered performance
in line with expectations and our full year outlook remains
unchanged. We continued to execute well on our strategic
priorities, with a continued focus on delivering operational
efficiencies and commercial recoveries.
The Group delivered £4.2 billion of
adjusted revenue1 in the period, reflecting a
6.1%2 year-on-year decline. Approximately 75% of
this decline was driven by continued weakness in our
ePowertrain3 product line as expected.
Driveline4 outperformed global light vehicle production
("GLVP") outside China, whilst revenues from our China JV were flat
year-on-year. Powder Metallurgy revenues declined marginally,
mainly due to weaker volumes. Translational foreign exchange
headwinds were £173 million, resulting in a
year-on-year reported adjusted revenue decline of
10%.
Adjusted operating margin for the
period was 6.1%, down 30bps2 year-on-year, reflecting a
20bps improvement from the first half of the year. This was
achieved through the execution of our commercial recovery program
and proactive cost management, limiting the drop-through margin to
11%, from the 30% assumed in our financial model.
Business Unit Performance
Automotive
Driveline continued to show
resilience and performed well, with a 2.4% adjusted revenue
decline, outperforming a 3.0% decline in light vehicle production
outside China5, underscoring the strength of its broad
portfolio and scale across customers, platforms and geographies. In
China, performance was stable compared to the previous year,
underperforming the 2.5% growth in local light vehicle
production6, due to customer mix factors. The
ePowertrain product group continued to be impacted by volatility in
BEV production volumes, with a 19% year-on-year revenue decline, as
trends in demand for AWD systems, ePowertrain components and eDrive
systems were broadly similar to those reported in the first half of
the year. Overall, Automotive experienced a 7.0%2
year-on-year decline in adjusted revenue in the period.
The Automotive segment's adjusted
operating margin was 6.4%, a decline of 40bps2 year on
year, but an improvement of 40bps from the first half, as the
impact from lower volumes was partially offset by commercial
recoveries and ongoing performance initiatives, which helped to
limit the negative impact from the drop through margin to
13%.
Powder
Metallurgy
Powder Metallurgy's adjusted revenue
declined by 1.9%2 in the period, underperforming the
1.3% GLVP decline7 primarily due to unfavorable customer
mix in North America. The adjusted operating margin remained stable
at 9.0%, with good execution of planned performance initiatives
offsetting the impact from the market volume weakness.
Outlook
The Group's overall performance in
the period was in line with expectations and prior full year
guidance is unchanged. Since August, industry forecasts excluding
China have been revised downwards. S&P is now projecting a 3.9%
decline in light vehicle production excluding China for 2024, or
1.9% decline globally. For 2025, we expect continued market
volatility. S&P is now forecasting 0.8% GLVP growth and 0.6%
growth outside of China, with slight declines expected in both
Europe and North America.
The Group continues to execute well
and remains confident in delivering our full year guidance of a
mid-to-high single-digit adjusted revenue decline and an adjusted
operating margin of between 6.0% and 7.0% in constant
currency.
The Group's full year results will
be announced on 5th March 2025.
Liam Butterworth, CEO of Dowlais, said:
"Performance was in line with our expectations and our full
year outlook remains unchanged, reflecting the resilience of
Driveline, our largest and most diversified product group, and the
effectiveness of our actions to focus on what we can control to
navigate a challenging market environment. Ongoing restructuring
and performance initiatives, along with good progress on our
commercial recovery program with customers, continue to mitigate
the impact of lower volumes. Additionally, the strategic review of
our Powder Metallurgy business is progressing well as we evaluate
options for the business. In the medium term, our strategy to
accelerate our transition to a powertrain agnostic portfolio, which
is better positioned to navigate market volatility, will support
sustainable, profitable growth and cash
generation."
Enquiries
Investor Relations:
Pier Falcione investor.relations@dowlais.com
+44 (0) 7974 974690
Media:
Neil Craven craven@montfort.london
+44 (0) 7876475419
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 The ePowertrain product group
supplies All Wheel Drive (AWD) systems, ePowertrain components and
eDrive systems
4 The Driveline product group
supplies Sideshafts and Propshafts
5 Based on NovemberForecast
(excluding China market) by S&P Global
6 Based on Novemberforecast (China
only) by S&P Global
7 Global Light Vehicle Production
based on Novemberforecast 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.
