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Dowlais Group (LSE: DWL)

Last close As at 02/07/2024

GBP0.69

▲ −3.85 (−5.27%)

Market capitalisation

GBP1,021m

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.

Key to the investment proposition is reaching the margin target of 10%+. Volume growth will assist, although the 30bp improvement reported suggests internal actions are providing benefits. Achieving such returns will assist earnings growth, the valuation and cash generation including potential for further buy-backs.

Latest Insights

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Industrials | Update

Dowlais Group — Margin expansion despite mixed auto markets

Industrials | Update

Dowlais Group — Motoring forward

Industrials | Update

Dowlais Group — Automotive production outlook softer

Industrials | Flash note

Dowlais Group — Firmly on track despite the UAW strike headwinds
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Sector

Industrials

Equity Analyst

David Larkam

David Larkam

Analyst, Industrials

Key Management

  • Roberto Fioroni

    CFO

Balance Sheet

Forecast net debt (£m)

852

Forecast gearing ratio (%)

35

Share Price Performance

Price Performance
% 1M 3M 12M
Actual 7.7 (6.8) (38.1)
Relative 9.1 (10.0) (44.0)
52 week high/low 128.1p/68.5p

Financials

In its trading update for the first four months, Dowlais reported organic revenue down 1.9%, but operating margin improved 30bp to 6.1%. Currencies proved a headwind of c 5%, primarily the Chinese renminbi. Automotive revenue declined 3.3%, with traditional Driveline and the China JV positive, offset by weakness in ePowertrain due to the softer EV market. Powder Metallurgy posted organic sales growth of 4.0%, ahead of the market driven by improved performance in its ICE-related business as it benefited from restocking in the period, and growth in the non-ICE-related portfolio. The outlook now is for a marginal organic sales decline (the market is flat) and operating profit similar to the previous year.

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 5.0 1.8
2024E 5350.0 631.0 247.0 13.1 5.3 1.7
2025E 5477.0 686.0 297.0 16.1 4.3 1.5

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