TIDMDWL
RNS Number : 8461S
Dowlais Group PLC
09 November 2023
9 November 2023
Dowlais Group plc
Trading update
Continued margin expansion, UAW strike impact absorbed, full
year expectations unchanged
Dowlais Group plc ("Dowlais" or the "Group"), the specialist
engineering group focussed on the Automotive sector, provides a
trading update for the four month period to 31 October 2023 ("the
period").
The Group has continued to execute successfully on its key
strategic priorities:
-- Profitable growth : Adjusted (1) revenues of GBP1.8 billion
in the period, delivering 4.7% (2) growth compared to the
same period in the prior year, above global light vehicle
production of 3.6% (3) .
-- Margin expansion : Group adjusted operating margin of 6.8%
in the period. Excluding central costs this is an increase
on the equivalent prior year period of 100bps and of 90bps
versus H1 2023. The continued operating margin expansion
is the result of successfully flowing volume to profit at
target drop-through margins of approximately 30% in the
businesses, while fully offsetting inflation and absorbing
the impact of the UAW strikes in North America.
-- Cash generation : Dowlais continues to generate healthy
free cashflow and remains on track to reduce net debt at
year-end whilst continuing to invest in organic growth,
expanding our best cost country manufacturing footprint
and executing ongoing restructuring programmes.
-- Portfolio transition : The businesses continue to secure
orders across their entire product portfolio. Most notably,
GKN Automotive has already delivered a record year of new
business bookings of GBP5.4 billion in forecast lifetime
revenues, of which GBP2.4 billion was awarded in the four
month period.
Impact of UAW strike action in North America
The full year financial impact of the UAW strike action on the
Group is expected to be in the range of GBP30m - GBP45m of adjusted
revenue and GBP10m - GBP15m of adjusted operating profit. Despite
this, strong operational execution within the businesses has
resulted in the strikes not impacting our ability to deliver on our
full year expectations. This assumes the ratification of the
proposed terms by union members and a smooth ramp up of production
at the impacted customer plants.
Business Unit Performance
GKN Automotive
In the period, GKN Automotive adjusted revenues grew by 4.8%,
resulting in adjusted operating margins of 7.6%, an increase on the
equivalent prior year period of 120bps and of 110bps versus H1
2023. Within Automotive, the market leading Driveline (4) and
ePowertrain (5) portfolios both delivered growth slightly ahead of
market. New business bookings continue to be strong, with the
business already achieving a new full-year lifetime bookings record
of GBP5.4bn by the end of October. Notably, the balanced nature of
these bookings underlines the business' ability to deliver
profitable growth regardless of the rate of vehicle
electrification.
GKN Powder Metallurgy
GKN Powder Metallurgy adjusted revenues in the period grew by
4.2%. Adjusted operating margins of 9.0% were in line with the
equivalent prior year period and the first half. Powder Metallurgy
has continued to increase its EV portfolio offering and secured
profitable new business wins in the period which position the
business for medium-term growth. In October, it announced that
commercial agreements for the supply of magnets, outlined in our
interim results, were signed with Schaeffler, representing a
significant milestone for this exciting future growth
opportunity.
Outlook
Full year expectations remain unchanged (6) . As we look into
2024 our largest business, GKN Automotive, has a number of major
new programme launches planned across its portfolio, which are
expected to drive profitable growth ahead of market.
The Group's full year results are expected to be announced on 21
March 2024.
Liam Butterworth, CEO of Dowlais, said:
"Following a strong first half, we have continued to execute
well on our strategic priorities and leverage the strength of our
operating businesses. We have delivered strong growth and continued
to expand margins as well as fully absorbing the impact of the UAW
strike. Thanks to the outstanding quality of our market leading
businesses we remain confident of delivering sector leading
financial performance, regardless of the speed of electrification
transition."
Notes
1. All Adjusted Financial measures are defined in the Glossary
to the Interim Financial Statements published on 12 September
2023.
2. This and all other prior period comparators contained in this
trading update are expressed on a constant currency basis,
eliminating the impact of translational foreign exchange
movements.
3. Based on the October 2023 forecast by S&P Global.
4. Sideshafts and Propshafts.
5. All Wheel Drive systems, ePowertrain components and eDrive systems.
6. It is noted that the average full year adjusted operating
profit derived from company-compiled consensus is GBP352
million.
Enquiries
Investor Relations:
Chris Dyett
investor.relations@dowlais.com
+44 (0) 7974 974690
Teneo:
Olivia Peters/Harry Cameron
dowlais@teneo.com
+44 (0) 7902 771008
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", "expects", "estimates", "projects", believes", "aims",
"plans", "predicts", "seeks", "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,
dividend policy and industry of Dowlais and commitments, ambitions
and targets relating to ESG matters. 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.
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END
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(END) Dow Jones Newswires
November 09, 2023 02:00 ET (07:00 GMT)
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