Dowlais Group (LSE: DWL)

Last close As at 22/02/2024

GBP0.86

−0.88 (−1.01%)

Market capitalisation

GBP1,201m

Dowlais Group is an automotive components group with two core divisions: GKN Automotive is the market leader in drive systems for both ICEs and EVs, and GKN Powder Metallurgy is the leader in sintered component manufacture and number two in metal powders.

Sales in the four months to end October of £1.8bn were up 4.7% (auto market up c 3.8%), with an adjusted operating margin of 6.8% (underlying margins +90bp on H123). The impact of the UAW strike is expected to be £30–45m to revenue and £10–15m to operating profit for FY23. GKN Automotive sales were up 4.8%, with order intake for the year of £5.4bn already a record. GKN Powder Metallurgy sales were up 4.2% in a positive recovery from H1. Commercial agreements with Schaeffler for the supply of magnets is the first milestone in developing the new EV magnets business, which is at the core of its EV/ICE strategy.

Latest Insights

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Industrials | Update

Dowlais Group — Automotive production outlook softer

Industrials | Flash note

Dowlais Group — Firmly on track despite the UAW strike headwinds

Industrials | Flash note

Dowlais Group — Margin and EV journey accelerating

Sector

Industrials

Equity Analyst

David Larkam

David Larkam

Analyst, Industrials

Key Management

  • Roberto Fioroni

    CFO

Balance Sheet

Forecast net debt (£m)

875.5

Forecast gearing ratio (%)

28

Share Price Performance

Price Performance
% 1M 3M 12M
Actual (4.2) (14.86) N/A
Relative (6.5) (17.08) N/A
52 week high/low 143.5p/86.0p

Financials

The restructuring of Dowlais is largely complete. With the benefit of automotive market recovery, this is expected to drive operating margins to over 11% (10%+ in GKN Automotive and 14% in Powder Metallurgy). The strategy is focused on shareholder value, including through corporate activity; management has pointed to a strategic review of Powder Metallurgy in the medium term.

Y/E Dec Revenue (£m) EBITDA (£m) PBT (£m) EPS (fd) (p) P/E (x) P/CF (x)
2021A 4731.0 515.0 109.0 N/A N/A N/A
2022A 5246.0 594.0 212.0 N/A N/A N/A
2023E 5486.6 621.3 259.3 13.4 6.4 2.1
2024E 5453.5 679.0 291.6 14.8 5.8 1.9

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