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RNS Number : 9515G  Dowlais Group PLC  11 November 2025

11 November 2025

 

Dowlais Group plc

Trading update

Strong operational execution with full year performance expected towards top
end of prior guidance

 

Dowlais Group plc ("Dowlais" or the "Group"), the specialist engineering group
focused on the Automotive sector, provides a trading update for the nine-month
period to 30 September 2025 ("the period").

The Group performed in line with management's expectations in the period,
continuing to deliver operational improvements notwithstanding the continued
volatile market environment. Adjusted revenue(1) for the period was £3.7
billion, representing a 1.1% year-on-year growth at constant currency(2),
against a 0.2% increase in light vehicle production outside China and a 3.8%
increase in global light vehicle production ("GLVP")(3). Translational foreign
exchange headwinds of £84 million contributed to a year-on-year reported
adjusted revenue decline of 1.2%. In Automotive, good recovery from
ePowertrain(4) and growth in our China JV was partially offset by a decline in
Driveline(5). Powder Metallurgy adjusted revenues declined 1.1%, mainly due to
weaker volumes in Powder.

The Group's adjusted operating margin in the period improved by 120bps
year-on-year to 6.6%, reflecting the impact of commercial recoveries, global
footprint restructuring initiatives and other ongoing performance improvement
actions which more than offset some operational inefficiencies in two of our
plants in North America. The impact of tariffs on operating profit in the
period was £22 million, largely in the Automotive segment. The Group expects
to offset the direct impact of tariffs through commercial recoveries and other
performance initiatives.

 

Business Unit Performance

Automotive

Automotive's adjusted revenue for the period increased by 1.6% year-on-year to
approximately £3.0 billion.

Performance in the Driveline product line improved in the three months ended
30 September 2025 (the "third quarter"), with revenue up 2.5% in the quarter,
bringing the revenue decline in the period to 2.4%, compared to a 0.2%
increase in light vehicle production outside China(6). The strong performance
in the third quarter reflects both an improved market backdrop and the benefit
of new platform launches, in line with prior communication.

Revenue from the ePowertrain product line in the period grew 10.4%
year-on-year, benefiting from a lower comparison base in 2024 and the
full-year production of an All-Wheel Drive (AWD) platform in the U.S., which
was impacted by prior-year planned downtime and staggered ramp-up linked to
the model changeover. The ePowertrain product line delivered an improved
performance in the third quarter, as it benefitted from one-time commercial
recoveries related to prior years volume shortfalls in e-drive platforms.

In the Group's China joint venture, revenue in the period increased 1.5%
year-on-year, compared to an 11.7% increase of local light vehicle production.
The underperformance continued to be driven by adverse customer mix as the
majority of the growth in local light vehicle production was driven by those
OEMs to which the Group's China JV has limited exposure.

Automotive's adjusted operating margin in the period was 7.2%, an increase of
160bps year-on-year, driven by commercial recoveries, ongoing performance
initiatives and restructuring benefits more than offsetting some operational
inefficiencies in North America due to customer schedule volatility and
supplier related disruptions, including quality and delivery issues. The
impact of tariffs on operating profit in the period was £22m.

 

Powder Metallurgy

Powder Metallurgy's adjusted revenue in the period declined by 1.1%
year-on-year, as growth from Acceleration Platforms product line was not
enough to offset revenue decline in both the Sinter and Powder product lines.

Powder Metallurgy's adjusted operating margin in the period was 8.2%, a
decline of 50bps year-on-year, mainly as a result of lower volume.

 

Outlook

Macroeconomic uncertainty related to U.S. tariffs, including those targeting
the automotive sector, has eased since March, with industry forecasts revised
upwards in recent months. S&P is now projecting a 0.3% decline in light
vehicle production excluding China, and a 2% growth globally.

In line with prior communication, we do not expect our full year performance
to be materially affected by the direct financial impact of these current
tariffs. Based on our strong historical track record, we expect to fully
recover these additional costs from customers through commercial actions and
other performance initiatives, however there may be a timing lag, and recovery
could extend into 2026.

Based on these assumptions and current customer schedules, our full-year
performance is now expected to be towards the top end of our guidance range
for 2025 of flat to a mid-single digit adjusted revenue decline and an
adjusted operating margin of between 6.5% and 7.0% in constant currency. The
Group's adjusted free cash flow is now expected to be slightly ahead of the
prior year.

 

Liam Butterworth, CEO of Dowlais, said:

""We delivered a quarter of solid execution in a volatile environment, with
performance supported by our diversified portfolio, strong cost discipline,
and continued execution of our global restructuring programme. We also remain
confident in our ability to fully recover the cost of current tariffs through
commercial initiatives over time.

Looking ahead, while industry conditions remain mixed, we now expect full-year
performance to be towards the top end of our guidance range. At the same time,
our proposed combination with American Axle continues to progress well, with
only two regulatory approvals outstanding, and represents a transformational
opportunity to accelerate our strategy and create a more resilient and
competitive global business with significant scale."

 

 

 

 

 

Enquiries

Investor Relations:

Pier Falcione investor.relations@dowlais.com
(mailto:investor.relations@dowlais.com)
 

+44 (0) 7855185420

 

Media:

Neil Craven craven@montfort.london (mailto: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 2024 results
announcement, published on 05 March 2025

2. All year-on-year changes are stated at constant currency unless stated
otherwise

3. Global Light Vehicle Production based on the October 2025 forecast from
S&P Global

4. The ePowertrain product group supplies All Wheel Drive (AWD) systems,
ePowertrain components and eDrive systems

5. The Driveline product group supplies Sideshafts and Propshafts

6. Based on October 2025 Forecast (excluding China market) by S&P Global

 

Profit Forecasts

The following statements contained within this announcement constitute profit
forecasts (the "Profit Forecasts") for the purposes of Rule 28 of the City
Code on Takeovers and Mergers. The Takeover Panel has granted Dowlais a
dispensation from the requirement to include reports from reporting
accountants and Dowlais' financial advisers in relation to the Profit
Forecasts. Other than the Profit Forecasts, nothing in this announcement is
intended, or is to be construed, as a profit forecast for any period:

i.        "Based on these assumptions and current customer schedules,
our full-year performance is now expected to be towards the top end of our
guidance range for 2025 of flat to a mid-single digit adjusted revenue decline
and an adjusted operating margin of between 6.5% and 7.0% in constant
currency"

 

ii.       "The Group's adjusted free cash flow is now expected to be
slightly ahead of the prior year"

The Board confirms that, as at the date of this announcement, the Profit
Forecasts are valid and have been properly compiled on the basis of the
assumptions set out below and that the basis of the accounting used is
consistent with Dowlais' accounting policies, which are in accordance with
IFRS.

The Dowlais Forecasts are based upon Dowlais' current internal financial
forecasts for the 12-month period ending 31 December 2025, prepared in
accordance with Dowlais' normal forecasting procedures and processes. These
procedures take into consideration multiple factors including historical
financial performance, anticipated changes in Dowlais' operations, sales
forecasts and forecasts of customer demand for light vehicles and management
judgment. In particular, the Profit Forecasts are based upon the most recent
global light vehicle production forecasts published by S&P Global in
October 2025 and Dowlais' current order book. The basis of accounting used for
the Profit Forecasts is consistent with the accounting policies of Dowlais
which are in accordance with IFRS. The Profit Forecasts have been prepared on
the basis referred to above and subject to the principal assumptions set out
below. The Profit Forecasts are inherently uncertain and there can be no
guarantee that any of the principal assumptions will occur and/or, if they do,
their effect on Dowlais' results of operations, financial condition, or
financial performance, may be material. The Profit Forecasts should therefore
be read in this context and construed accordingly. The principal assumptions
assumed in the Dowlais Profit Forecasts are: (a) there will be no material
change to macroeconomic, political, inflationary, regulatory or legal
conditions in the markets or regions in which Dowlais operates, including
changes in import or export tariffs; (b) there will be no material change in
current interest rates, economic growth, inflation expectations or foreign
exchange rates compared with Dowlais' estimates; (c) there will be no material
change in accounting standards; (d) there will be no material change in market
conditions in relation to customer demand or the competitive environment; (e)
there will be no material litigation or regulatory investigations, or material
unexpected developments in any existing litigation or regulatory
investigations, in relation to any of Dowlais' operations, products or
services; (f) there will be no business disruptions that materially affect
Dowlais, its customers, operations, supply chain or labour supply, including
natural disasters, acts of terrorism, cyber-attack and/or technological
issues; (g) there will be no material acquisitions, disposals, distribution
partnerships, joint ventures or other commercial agreements, other than those
already assumed within the forecast; (h) there will be no material change in
the existing operational strategy of Dowlais; (i) there will be no material
changes in Dowlais' accounting policies and/or the application thereof; (j)
there are no material strategic investments or capital expenditure in addition
to those already planned; and (k) there will be no material change in the
management of Dowlais.

Profit Estimates

The following statements contained within this announcement constitute profit
estimates for the Group and the commentary on revenue and margin for both
Automotive and Powder Metallurgy constitute profit estimates in respect of
those divisions (together the "Q3 Profit Estimates") for the purposes of Rule
28 of the City Code on Takeovers and Mergers:

i.          "Adjusted revenue(1) for the period was £3.7 billion"

 

ii.          "The Group's adjusted operating margin in the period
improved by 120bps year-on-year to 6.6%"

The Takeover Panel has granted Dowlais a dispensation from the requirement to
include reports from reporting accountants and Dowlais' financial advisers in
relation to the Q3 Profit Estimates. Other than the Q3 Profit Estimates,
nothing in this announcement is intended, or is to be construed, as a profit
estimate for any period.

The Board confirms that, as at the date of this announcement, the Q3 Profit
Estimates are valid and have been properly compiled on the basis of the
assumptions set out below and that the basis of the accounting used is
consistent with Dowlais' accounting policies, which are in accordance with
IFRS.

The Q3 Profit Estimates are based on the unaudited condensed interim financial
statements of Dowlais for the three months ended 30 September 2025. The basis
of accounting used is consistent with the accounting policies of Dowlais which
are in accordance with IFRS and are those that Dowlais expects to apply in
preparing its Annual Report and Financial Statements for the financial year
ending 31 December 2025. Given that the period to which the Q3 Profit
Estimates relate has been completed, there are no other principal assumptions
underpinning the Q3 Profit Estimates.

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.

 

 

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