Dowlais off to 'encouraging' start to the year

The automotive components specialist, which was spun out of Melrose Industries last month, said adjusted revenues rose 9% on a constant currency basis in the four months to 30 April, to £1.9bn.

Within that, power metallurgy revenues were flat, but automotive reported growth of 11%, led by Europe and the US.

Group adjusted operating margins, meanwhile, were "significantly" up on the same period a year previously, while cash conversion continued to be "strong".

Dowlais said: "The group has made an encouraging start to 2023, increasing our confidence in achieving adjusted operating margin expansion - pre-central costs - in the full year. Our full-year expectations are unchanged."

Liam Butterworth, chief executive, added: "As markets continue to recover, we are increasingly confident of delivering sector-leading financial performance."

Edison, which is forecasting 2023 full-year revenues of £5.49bn with pre-tax profits of £259m, said: "Volume and top-line growth are expected to provide leverage over the restructured cost base and drive margin expansion, to generate strong earnings growth and demonstrate the quality of the operations."

Peel Hunt reiterated its ‘buy’ recommendation following the maiden trading update, noting: "The statement matches what we anticipated: a good start and a better underpin but no change to numbers, which mirrors the global peer group."

As at 1130 BST, shares in Dowlais were off 3% at 138.9p.

Melrose, which acquired engineer GKN in 2018, is now as a pure-play aerospace firm.