- Dowlais reported its adjusted revenue dropped by 6.4% to £4.9bn last year
- It observed a double-digit percentage fall in sales of all-wheel drive systems
GKN Automotive owner Dowlais Group’s sales were hit by volatility in the electric vehicle market last year ahead of its £1.2billion sale to a US rival.
The automotive engineering specialist reported its adjusted revenue dropped by 6.4 per cent at constant currency rates to £4.9billion last year, mainly owing to weakness in its electric powertrain product line.
It observed a double-digit percentage fall in sales of all-wheel drive systems, as well as a ‘significant decline’ in electric drive systems.
While the London-based firm’s Driveline business outperformed the broader market outside China, its adjusted turnover slipped by 3.2 per cent to under £2.3billion.
Light vehicle production in China rose by 3.6 per cent last year, boosted by soaring EV demand, generous government support, and automakers like BYD and SAIC Motor expanding capacity.
However, global output fell by 1.1 per cent following a downturn in consumer demand amid elevated inflation and interest rates, and the removal of subsidies in countries such as Germany.
Slowdown: Dowlais Group has reported a challenging annual performance amid greater volatility in the electric vehicle market
In the United States, battery EV production was affected by increased prices, higher insurance costs and poor charging infrastructure.
As industry forecasts have light vehicle output flatlining in 2025, Dowlais anticipates its revenue either remaining constant or shrinking by a mid-single-digit percentage figure.
The company also expects to record an adjusted operating margin of between 6.5 per cent and 7 per cent, helped by restructuring savings and ‘ongoing performance initiatives.’
‘Our focus remains on accelerating the transition to a powertrain-agnostic business model to enable sustainable, profitable growth and robust cash generation over the medium term,’ said Liam Butterworth, chief executive of Dowlais.
To this effect, Dowlais recently agreed to merge with Detroit-based American Axle and Manufacturing in a £1.2billion deal just two years after Melrose Industries spun off the firm.
The enlarged group will be listed in New York, while Dowlais’ London office will shut down and 1,250 jobs could be lost.
Butterworth said the transaction ‘represents a significant opportunity to accelerate the execution of our strategy by leveraging scale, capabilities, and the outstanding management teams of both companies.
‘We are confident that these actions, combined with the significant synergies and benefits of this transaction, will continue to drive value for our shareholders and create a stronger foundation for the future.’
Should the deal go ahead, it will represent another massive blow for the London markets, which has lost multiple major businesses to foreign takeovers in recent years.
Private equity firms have acquired big names such as supermarket chain Morrisons, cybersecurity giant Darktrace, and music catalogue owner Hipgnosis Songs Fund.
Other companies that have fallen into overseas hands include Robinsons Squash owner Britvic, packaging group DS Smith, and confectionery seller Hotel Chocolat.
Dowlais Group shares were 1.8 per cent up at 67.1p on Wednesday morning but have slumped by around 43 per cent from their demerger price.
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