REG - CT Automotive Group - Trading Update

CT AutomotiveAnnouncement

15/08/2022 07:00

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RNS Number : 9354V  CT Automotive Group PLC  15 August 2022

15 August 2022

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS STIPULATED UNDER THE MARKET
ABUSE REGULATION (EU NO. 596/2014) AS IT FORMS PART OF UK DOMESTIC LAW BY
VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 ("MAR").

 

 

CT AUTOMOTIVE GROUP PLC

("CT Automotive" or the "Group")

 

H1 2022 TRADING UPDATE

 

Revenues ahead in H1, production recovery gaining momentum

 

CT Automotive, a leading designer, developer and supplier of interior
components to the global automotive industry, today provides an update on its
financial performance for the half year ended 30 June 2022 ("H1 2022") and the
outlook for the full year.

 

Trading Performance

 

Revenues for H1 2022 were ahead of the Board's expectations at c.$55 million.
Reduced vehicle production volumes seen in H2 2021, primarily as a result of
semiconductor shortages, continued into H1 2022 as anticipated, with signs of
the expected recovery in volumes building in the second half of the current
year.

 

While the Group's underlying trading performance was in line with
expectations, gross margin in the period was impacted by two non-recurring
items. Firstly, Covid-related lockdowns in China in H1 2022 and the associated
disruption to freight resulted in the Group experiencing delayed shipping
which required an increase in the use of air freight to ensure customer demand
was met. While the majority of this cost was passed on to customers, the Group
incurred an additional c.$1.6 million of freight costs. This issue was
resolved by the end of the first half, with a return to normal shipping
methods.

 

Secondly, inflationary cost pressures and a shortage of labour has led to the
Group's UK manufacturing facility becoming loss-making, impacting H1 gross
margin by c. $1.7 million. The Board has therefore taken the decision to cease
the UK manufacturing operations, which accounted for c.5% of Group revenues.
Production of the core components in the UK is being relocated to the Group's
existing overseas facilities, such that Group revenues will not be materially
impacted by the closure. This will result in a very modest exceptional charge
related to the closure in the H1 2022 accounts.

 

Outlook

 

The Board expects global vehicle production volumes to continue to recover
during 2022 and automotive supply chain issues to resolve fully in 2023. The
latest indicators are showing a stronger step up in production for the Group
in H2 2022 than previously expected.

 

While the delivery of current OEM production schedules for H2 2022 would
enable the Group to meet expectations for FY22, the Board is mindful of the
possibility that the continuing macroeconomic uncertainty and any changes in
timing or demand levels could impact the H2 trading performance.

 

H2 2022 gross margin is expected to be stronger than originally forecast, with
increased sales driving economies of scale within manufacturing operations,
combined with efficiency initiatives delivered since IPO. Once fully
implemented, these efficiency initiatives will provide benefits to the
business into FY23 and beyond. As a result of these initiatives and production
volume indications the Board's expectations for FY23 remain unchanged.

 

Notice of Results

 

The Group expects to announce its results for the six months ended 30 June
2022 in mid-September 2022.

 

Scott McKenzie, Chief Executive Officer of CT Automotive, commented:

 

"We were pleased to achieve first half revenues ahead of our expectations,
while managing one-off challenges. While automotive market and macroeconomic
uncertainty persists, the Board remains confident that its strategy as set out
at the time of its IPO will deliver significant growth in H2 2022 and over the
coming years."

 

For further information, please contact:

 

 

 CT Automotive                                 via MHP

 Simon Phillips, Executive Chairman

 Scott McKenzie, Chief Executive Officer

 David Wilkinson, Chief Financial Officer

 MHP Communications (Financial PR)             Tel: +44 (0)20 3100 8540

 Tim Rowntree                                  CTAutomotive@mhpc.com

 Charlie Barker

 Liberum (Nominated Adviser and Broker)        Tel: +44 (0)20 3100 2000

 Richard Lindley

 Benjamin Cryer

 

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 Turkey and the Czech
Republic.

 

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 roster
of OEM end customers, both directly and via Tier One suppliers including
Faurecia and Marelli. End customers include volume manufacturers, such as
Nissan, and luxury car brands such as Bentley and Lamborghini. In addition,
the Group supplies electric car manufacturers, including Lucid. It has also
recently started working with e.Go Mobile, a German manufacturer which plans
to launch a series of small electric vehicles for the budget end of the
market.

 

The Group currently supplies component part types to over 47 different models
for 19 OEMs. Since its formation, the Group has been the only significant new
entrant into the market, which is characterised by high barriers to entry.

 

 

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