Dowlais FY revenues seen 'slightly below' prior year

Engineering group Dowlais warned on Tuesday that full-year revenues were likely to be "slightly below" FY23 as a result of "increased volatility".

Dowlais said it had started the year broadly in line with expectations. However, while current industry forecasts expect an improvement in the second half, after a weak first half, Dowlais stated that "some uncertainty remains".

Consequently, Dowlais anticipates revenue for 2024 to be slightly below the prior year at constant currency, with performance more weighted to the second half. Based on these assumptions, it remains confident in its ability to achieve operating margin expansion and grow free cash flow for the full year.

The FTSE 250-listed group said it had delivered £1.7bn of adjusted revenues in the four months ended 30 April, a year-on-year decline of 1.9%. Translational foreign exchange headwinds were £90.0m, resulting in a year-on-year reported adjusted revenue decline of 6.6%.

Encouragingly, despite market volatility, adjusted operating margins of 6.1% in the period were up 30 basis points over the same period a year earlier with margin expansion achieved in both its automotive and powder metallurgy divisions.

Chief executive Liam Butterworth said: "This performance demonstrates the resilience of Driveline, whose powertrain agnostic characteristics and broad diversification make it well placed to succeed. I am also encouraged by the strong performance of our JV in China, where we grew ahead of the market and of Powder Metallurgy. These successes were tempered by challenges in the ePowertrain product group. We achieved a 30bps increase in our adjusted operating margins, driven by retrospective recoveries and ongoing performance initiatives."

As of 0845 BST, Dowlais shares had slumped 5.73% to 72.45p.

Reporting by Iain Gilbert at Sharecast.com