EU and US could reach trade deal this weekend - Reuters
Investing.com -- Dowlais shares climbed 3.4% on Thursday as the company reported a stronger-than-expected first-quarter performance, with improvements in operating margins and effective self-help measures.
Despite a reduction in full-year guidance reflecting a softer global auto forecast, the results showcased resilience in a challenging market.
The company’s organic sales saw a 2.5% decline in the four months to the end of April, which was less than the anticipated 5% drop and slightly outpaced the global light vehicle production (GLVP) ex-China figures, which fell by 2.7%.
Dowlais’s automotive business sales decreased by 1.5%, while its Powder Metallurgy segment declined by 5.7%. However, operating margins improved year-over-year (YoY) by 80 basis points to 6.6%.
Within the automotive sector, Driveline sales were down 6.6%, affected by customer mix and program timings, with expectations for recovery in the second half of the year.
Looking ahead, management anticipates reaching the lower end of its existing full-year guidance, with flat to mid-single digit sales declines and adjusted operating margins between 6.5-7%.
This cautious outlook is a response to the deteriorating global vehicle production forecast, now expected to shrink by 3.3% outside China.
Dowlais does not foresee a significant impact from tariffs, with recovery efforts likely to take effect in the latter half of the year, leading to a pronounced difference between first and second-half performance.
Current consensus for EBITA stands at approximately £317 million, with a 6.7% margin, while RBC analysts have adjusted their forecast to £296 million, assuming a 3% sales decline and 6.2% margins.
RBC analysts commented, "Slightly better then we expected Q1 trading, with good self-help evident in the margin. FY outlook downgrade to be expected given the global auto outlook, and overall in line with our own expectations.
RBC retained its Outperform rating.
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