REG - CT Automotive Group - Trading Update

CT AutomotiveAnnouncement

08/12/2022 16:15

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RNS Number : 1218J  CT Automotive Group PLC  08 December 2022

8 December 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")

 

TRADING UPDATE

 

CT Automotive, a leading designer, developer and supplier of interior
components to the global automotive industry, today provides an update on its
performance for the year ending 31 December 2022 ("FY 2022").

 

As previously announced, trading in the first half of the year was in-line
with the Board's expectations, with strong end customer demand building into
Q4 as global vehicle production volumes began to recover. However, the Group
has seen a re-emergence of supply chain disruption across the operating
environment, including shortages in semi-conductors, and the impact of
specific operational challenges at its manufacturing facilities. Delays in the
start of production on new orders has also resulted in the Group incurring
costs in connection with Tooling, with the associated revenue not now expected
to be recognised until FY 2023 which means that related profits of c$2.5m will
also not be recognised until FY 2023. As a result, FY 2022 revenues are
expected to be lower than previously anticipated at c.$120m, with higher costs
leading to an expected adjusted loss before tax of around $11.0m.

 

The enforcement of the Government's Zero-Covid policy in China resulted in the
temporary closure of some of the Group's manufacturing facilities and local
suppliers, leading to significant destocking and increased costs in the second
half of the year as the Group incurred costs to catch up production and
expedite delivery of materials from local suppliers.

 

The Group continues to implement cost savings initiatives focused on improving
efficiencies and margins, and reflecting the changing demand environment. The
full benefits of these initiatives will be felt in FY 2023. Good further
progress has been made on key initiatives focused on internal cost
improvements, inflation-based customer recoveries and cash flow. This has
included the successful negotiation of improved payment terms with customers
and suppliers.

 

As at 30 November 2022 the Group had net debt of $11.6m (as at 30 June 2022:
$20.2m), representing utilisation of 49% of available facilities.

 

Opening of new manufacturing facility in Mexico

 

The Group has continued to make progress on the strategic priorities set out
at IPO to accelerate long-term growth. This has included the opening of its
new facility in Puebla, Mexico, in July, with shipments of manufactured parts
to one of the Group's longstanding customers, Marelli North America commencing
in Q4. However, the Group experienced delays to the start of production at its
new production facility due to the impact of continued supply chain disruption
on its customers. The Group continues to receive enquiries from existing and
prospective customers.

 

Outlook

 

While automotive supply chain and macroeconomic uncertainty persists in the
short-term, the Board remains confident of the long-term growth opportunity
for the Group as global vehicle production volumes recover and automotive
supply chain issues resolve fully.

 

For further information, please contact:

 

CT Automotive
 
           via MHP

Simon Phillips, Executive Chairman

Scott McKenzie, Chief Executive Officer

David Wilkinson, Chief Financial Officer

 

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

Tim
Rowntree
 

Charlie Barker

CTAutomotive@mhpgroup.com

 

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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