REG - CT Automotive Group - Trading Statement

CT AutomotiveAnnouncement

29/01/2025 07:00

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RNS Number : 0075V  CT Automotive Group PLC  29 January 2025

29 January 2025

 

CT Automotive Group plc

("CT Automotive" or the "Group")

 

Trading Update

Highly Resilient Performance despite challenged Automotive Market

CT Automotive, a leading designer, developer and supplier of interior
components to the global automotive industry, is pleased to announce the
following trading update for the twelve months ended 31 December 2024.

 

Despite a challenging final quarter of the year for the automotive industry,
the Group expects to deliver a highly resilient performance for 2024, with
revenue no less than $117m*, adjusted PBT no less than $8.6m*, broadly in line
with market expectations**. Due to strong cash management, net debt at 31
December was slightly better than expected at $7.5m***.

 

Q4 2024 saw major OEMs seeking to destock, driven by higher interest rates and
concerns over government set EV quotas.  The Group took measures to offset
the impact of these wider market headwinds to some extent through: margin
efficiency programmes implemented across all operational sites; the Group's
agnostic position between ICE and electric vehicles; and a continuing drive
across the business to secure further significant operational efficiencies
through automation and digitalisation initiatives, with a specific focus on
AI.

 

Contract Wins

 

CT Automotive is pleased to announce several significant new contracts wins in
the second half of FY24, across multiple OEMs, representing a key step in our
strategic growth plan. These new contracts include programs valued at
approximately $12 million annually, with production commencing later this
year in our Mexico facility.

 

These contract wins demonstrate CT Automotive's ability to deliver competitive
and innovative solutions to leading automotive OEMs. Importantly, they align
with our strategic objective of driving revenue growth while leveraging
operational efficiencies to enhance profitability.

 

Our Mexican facility, which operates on a fixed cost structure, is
particularly well-positioned to benefit from further growth. The facility can
accommodate three times its current revenue without requiring additional
investment in property or overhead.

 

Outlook

 

The automotive industry continues to face significant challenges. Legacy
automakers are experiencing declining market share in China, a region that has
historically contributed a substantial portion of their overall profitability.
However, this trend has no material impact on CT Automotive, as we are not
actively engaged in the Chinese market for legacy automakers.

 

Furthermore, the rise of Chinese EV companies establishing plants in Europe
and America presents additional competitive pressures, compelling legacy
automakers to focus intensively on improving profitability.

 

These industry dynamics play strongly into the hands of CT Automotive. The
Group is committed to driving costs down through significant innovation, we
are uniquely positioned to deliver the lowest manufacturing costs in our
product categories. This focus enables us to aggressively target OEMs that are
under immense pressure to find solutions to reduce costs and remain
competitive in the global market against Chinese competitors.

 

Recognising this opportunity, CT Automotive has made significant investments
in its sales function, expanding the team to capitalise on these market
conditions. While the global marketplace may seem challenging for the Group in
the short term, we view this as a perfect environment to fuel growth,
leveraging our cost-efficient, highly automated, and advanced manufacturing
capabilities to support OEMs in achieving their goals.

 

Currently, CT Automotive represents just a small fraction of this market
sector, but the opportunity exists now to grow our market share significantly
in conditions that perfectly align with CT's business model. Therefore,
despite tough industry conditions, given the contract wins mentioned above, we
expect 2025 to produce at least mid-single digit revenue growth together with
further margin expansion.

 

Simon Phillips, Chief Executive Officer of CT Automotive, said "Despite
challenging times where the industry has seen reduced volumes, CT Automotive
has leveraged AI, digitization, and automation to maintain strong
profitability. Historically, CT Automotive has achieved substantial
year-on-year CAGR growth. After completing large-scale digitization and
automation, our focus has now shifted back to increasing top-line revenue.

 

We have expanded our sales function significantly, adopting a far more
targeted and strategic approach, leveraging both existing and new customer
bases. This is part of our aggressive strategy to win new business and
increase platform content across models.

 

In today's market, where legacy automakers face significant profitability
challenges, CT Automotive's low-cost model positions us perfectly to capture
increased market share during this period of industry transformation.

 

Our forward plan ensures that fixed costs remain stable while increased sales
directly enhance gross profit, pushing profitability to the bottom line."

 

(*unaudited and on a constant currency basis)

(**Immediately prior to this announcement, Singers Capital Markets estimates
for FY2024 were Sales $119.1m and Adj PBT $9.3m)

(***Net debt pre IFRS 16)

 

 

Notice of Results

The Group expects to announce its results for the twelve months ended 31
December 2024 by the end of April 2025.

 

Enquiries:

 CT Automotive                                                       Via Novella

 Simon Phillips, Chief Executive Officer

 Salman Mohammed, Chief Financial Officer

 Singer Capital Markets Advisory LLP (Nominated Adviser and Broker)  Tel: +44 (0)20 7496 3000

 Steve Pearce, Alex Bond, James Todd

 Novella Communications (Financial Public Relations)                 Tel : +44 (0)20 3151 7008

 Tim Robertson, Claire de Groot, Safia Colebrook                     ctautomotive@novella-comms.com (mailto:ctautomotive@novella-comms.com)

 

Notes to editors

 

CT Automotive is engaged in the design, development and manufacture of bespoke
automotive interior finishes (for example, dashboard panels and fascia
finishes) and kinematic assemblies (for example, air registers, arm rests,
deployable cup holders and storage systems), as well as their associated
tooling, for the world's leading automotive original equipment suppliers
("OEMs") and global Tier One manufacturers.

 

The Group is headquartered in the UK with a low cost manufacturing footprint.
Key production facilities are located in Shenzhen and Ganzhou, China
complemented by additional manufacturing facilities in Mexico, Türkiye and
Czechia.

 

CT Automotive's operating model enables it to pursue a price leadership
strategy, supplying high quality parts to customers at a lower overall landed
cost than competitors. This has helped the Group build a high-quality
portfolio of OEM customers, both directly and via Tier One suppliers including
Forvia and Marelli.  End customers include volume manufacturers, such as
Nissan, Ford, GM and Volkswagen Audi Group, and premium luxury car brands such
as Bentley and Lamborghini.  In addition, the Group supplies all our customer
base with a range of products for PHEV and BEV platforms and supplies electric
car manufacturers, including Rivian and a US based major EV OEM.

 

The Group currently supplies component part types to over 57 different models
for 22 OEMs. Since its formation, the Group has been one of the very few new
entrants to the market, which is characterised by high barriers to entry.

 

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