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.
Management is focused on shareholder returns, hence strives for profitability with target operating margins (pre-central costs) over 10% from 7.3% in FY23. Global automotive production is expected to be marginally negative, which is unhelpful but with restructuring benefits we still expect positive margin progression this year.
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Industrials |
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Industrials |
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Roberto Fioroni
CFO
Forecast net debt (£m)
929
Forecast gearing ratio (%)
38
% | 1M | 3M | 12M |
---|---|---|---|
Actual | (0.4) | (11.4) | (37.2) |
Relative | (1.5) | (16.6) | (38.3) |
52 week high/low | 143.5p/75.5p |
FY23 organic growth was 6.3% with an increase in the operating margin of 70bp, 30bp post additional head office costs as a stand-alone plc. The automotive division’s organic growth was 7.0% behind the overall automotive market as management continued to focus on profitability. Margins expanded by 110bp to 6.9%, with positive progress towards management’s target of 10%+. Powder Metallurgy was held back by the EV shift with growth of 3.5% and margins of 9.2%. Cash generation was positive with net debt reduced to £847m, with net debt/EBITDA of 1.4x enabling management to announce a £50m share buy-back programme.
Y/E Dec | Revenue (£m) | EBITDA (£m) | PBT (£m) | EPS (fd) (p) | P/E (x) | P/CF (x) |
---|---|---|---|---|---|---|
2022A | 5246.0 | 594.0 | 212.0 | (15.3) | N/A | N/A |
2023A | 5489.0 | 618.0 | 264.0 | 13.8 | 5.9 | 2.1 |
2024E | 5482.0 | 645.0 | 261.0 | 13.3 | 6.1 | 1.9 |
2025E | 5612.0 | 697.0 | 302.0 | 15.9 | 5.1 | 1.8 |