Latest news with #GKN
Daily Mail
4 days ago
- Automotive
- Daily Mail
Car parts maker faces £29M cash burn from tariffs ahead of US takeover
GKN Automotive owner Dowlais Group revealed a cash burn of £29million for the first half of the year on Thursday after the US imposed hefty tariffs on car part imports earlier this year. It comes as Dowlais, which makes driveline systems and other automotive parts, prepares to be acquired by US auto parts giant American Axle & Manufacturing in a £1.2billion deal announced in January. Dowlais posted an adjusted free cash outflow of £29million for the six months to 30 June, compared with a £10million inflow last year, after US President Donald Trump imposed a 25 per cent levy on imports of everything from engines, to body parts and fasteners. It said the cash flow result on was 'primarily driven by the impact of restructuring outflows' and the timing of dividend receipts from its Chinese joint venture. US tariffs on the automotive sector have forced a number to revise forecasts, shift production plans, and temporarily shut down plants. Dowlais told investors in May its annual profits would likely come in at the lower end of previous guidance, citing increased economic uncertainty stemming from recent US tariffs. It said at the time it plans to offset additional costs by passing them on to customers, with cost recovery expected to mainly happen in the second half of the year. On Thursday the group posted a 1.6 per cent decline in adjusted revenues to £2.46billion, but adjusted operating profits increased by 11 per cent. 'Lower volumes and tariffs, which were lower than initially anticipated, was more than offset by the benefits of global footprint restructuring initiatives and other ongoing performance improvement actions,' Dowlais said. Boss Liam Butterworth added: 'We delivered a solid first-half performance, with continued margin expansion despite ongoing macroeconomic uncertainty and market volatility. 'Our ability to grow profitability despite lower volumes and tariff-related impacts highlights the resilience of our operating model and the strong execution of our restructuring and performance initiatives.' Dowlais shares opened 0.4 per cent higher at 70.9p. American Axle & Manufacturing takeover Dowlais also told investors on Thursday it had so-far received nine regulatory approvals or clearances for its takeover by American Axle & Manufacturing, and will ;actively engage with regulatory authorities to obtain all remaining approvals'. Following its approval at a recent shareholder meeting, the combination is expected to take effect in the final quarter of 2025. American Axle & Manufacturing agreed to acquire the car parts producer in a $1.4billion (£1.2billion) deal announced in January, just two years after Melrose Industries spun Dowlais out of its GKN Automotive division. American Axle said at the time it would seek to cancel the trading of Dowlais shares in London and list the enlarged firm on the New York Stock Exchange. However, the Michigan-based business now wants a secondary listing of its shares in the UK capital as part of the acquisition. It said this would 'ensure a greater range of both existing and prospective shareholders are able to access the future value creation opportunity of the combination'. American Axle's pursuit of Dowlais follows choppy electric vehicle demand and increasing competition from Chinese automakers, which benefit from generous public subsidies and large domestic demand. Following the deal, the merged group will have 50,000 staff members, with around 1,250 staff at risk of redundancy.
Daily Mail
4 days ago
- Automotive
- Daily Mail
Car parts maker Dowlais faces £29m cash burn from tariffs ahead of US takeover
GKN Automotive owner Dowlais Group revealed a cash burn of £29million for the first half of the year on Thursday after the US imposed hefty tariffs on car part imports earlier this year. It comes as Dowlais, which makes driveline systems and other automotive parts, prepares to be acquired by US auto parts giant American Axle & Manufacturing in a £1.2billion deal announced in January. Dowlais posted an adjusted free cash outflow of £29million for the six months to 30 June, compared with a £10million inflow last year, after US President Donald Trump imposed a 25 per cent levy on imports of everything from engines, to body parts and fasteners. It said the cash flow result on was 'primarily driven by the impact of restructuring outflows' and the timing of dividend receipts from its Chinese joint venture. US tariffs on the automotive sector have forced a number to revise forecasts, shift production plans, and temporarily shut down plants. Dowlais told investors in May its annual profits would likely come in at the lower end of previous guidance, citing increased economic uncertainty stemming from recent US tariffs. It comes as Dowlais prepares to be acquired by US auto parts giant American Axle & Manufacturing after a £1.2billion deal announced in January. It said at the time it plans to offset additional costs by passing them on to customers, with cost recovery expected to mainly happen in the second half of the year. On Thursday the group posted a 1.6 per cent decline in adjusted revenues to £2.46billion, but adjusted operating profits increased by 11 per cent. 'Lower volumes and tariffs, which were lower than initially anticipated, was more than offset by the benefits of global footprint restructuring initiatives and other ongoing performance improvement actions,' Dowlais said. Boss Liam Butterworth added: 'We delivered a solid first-half performance, with continued margin expansion despite ongoing macroeconomic uncertainty and market volatility. 'Our ability to grow profitability despite lower volumes and tariff-related impacts highlights the resilience of our operating model and the strong execution of our restructuring and performance initiatives.' Dowlais shares opened 0.4 per cent higher at 70.9p. American Axle & Manufacturing takeover Dowlais also told investors on Thursday it had so-far received nine regulatory approvals or clearances for its takeover by American Axle & Manufacturing, and will ;actively engage with regulatory authorities to obtain all remaining approvals'. Following its approval at a recent shareholder meeting, the combination is expected to take effect in the final quarter of 2025. American Axle & Manufacturing agreed to acquire the car parts producer in a $1.4billion (£1.2billion) deal announced in January, just two years after Melrose Industries spun Dowlais out of its GKN Automotive division. American Axle said at the time it would seek to cancel the trading of Dowlais shares in London and list the enlarged firm on the New York Stock Exchange. However, the Michigan-based business now wants a secondary listing of its shares in the UK capital as part of the acquisition. It said this would 'ensure a greater range of both existing and prospective shareholders are able to access the future value creation opportunity of the combination'. American Axle's pursuit of Dowlais follows choppy electric vehicle demand and increasing competition from Chinese automakers, which benefit from generous public subsidies and large domestic demand. Following the deal, the merged group will have 50,000 staff members, with around 1,250 staff at risk of redundancy. Among the jobs threatened with the axe are duplicate head office, administrative and senior management positions, as well as research and development jobs in the US and Europe. Dowlais' London office in Victoria will also shut down, while its chief executive, Liam Butterworth, will stand down after gaining a £928,500 payment.
Times
01-08-2025
- Business
- Times
Melrose defies tariffs and supply woes to beat profit forecast
A leading aerospace business's first-half profits were above forecasts in the face of disruption caused by President Trump's tariffs and long-running aerospace supply chain issues. Operating profits at Melrose, the owner of GKN Aerospace, were £310 million for the six months ended June 30, compared with a company-compiled analysts' consensus of £299 million. Revenue rose 6 per cent to £1.7 billion, driven by a particularly strong performance from Melrose's engines division, which supplies parts to the likes of Rolls-Royce and the US-based Pratt & Whitney. The performance sent shares up more than 5 per cent on a day that markets were backed into a retreat as Trump introduced a slew of fresh tariffs. Melrose was buoyed last week by news that the US-EU trade deal had granted a tariff exemption for aircraft and aviation parts, although it said on Friday it had successfully mitigated the 'direct impact' of the current levies on its half-year bottom line. The FTSE 100 group has a significant presence in the US, which makes up nearly two thirds of its sales, and it recently opened a multimillion-pound factory in San Diego. It does, however, run an operation in Mexico, which exports to both Europe and the United States. 'We delivered a strong performance in the first half with a 29 per cent improvement in profit and cashflow significantly stronger than last year despite the backdrop of supply chain and tariff disruptions,' Peter Dilnot, chief executive, said. • One-sided trade deal suggests outsider status has benefited Britain Melrose has benefited from a twin boom in defence and aviation. Conflict in Ukraine and the Middle East has led to governments increasing military spending budgets, while travel demand has soared in the post-pandemic era, leading to record order backlogs for new aircraft. It has, however, faced hurdles from wider supply chain issues affecting the aerospace industry, which have fuelled problems at the planemakers Boeing and Airbus. Those difficulties were further compounded by the additional complexity of Trump's trade levies. Dilnot said he was confident of delivering sustained increases in profit and cashflow in the years ahead and a £600 million free cashflow target by 2029. Melrose has managed to offset some of the impact from supply chain snarl-ups thanks to increasing demand for its aftermarket services, as companies look to get more life out of older aircraft. Dilnot said that despite lower growth forecasts for global air travel, 'constrained build rates' for new aircraft coupled with record order backlogs had forced airlines to make better use of their fleets, 'fuelling' aftermarket growth. • North Sea oil is a 'treasure chest' for the UK, says Donald Trump Operating profit at Melrose's engines division grew by more than a quarter to £261 million over the half-year period, alongside a 6 per cent rise in engine flying hours. Revenue increased 11 per cent to £781 million. Its structures division reported a near-third rise in operating profit to £63 million, with a strong 10 per cent revenue growth in defence. The company supplies parts for some of the largest defence programmes in the world, including Chinook helicopters and F-35 fighter jets. Recent contract awards include the extension of a six-year tie-up with BAE Systems to provide parts for its Eurofighter Typhoon jet, and a five-year deal with the US defence giant Lockheed Martin. Melrose's board has set an interim dividend of 2.4 pence per share for 2025, up 20 per cent year-on-year. The company is currently £91 million through a £250 million, 18-month, share buyback programme. Founded in 2003 by Christopher Miller, David Roper and Simon Peckham, Melrose floated on London's Aim market the same year. After rising to the FTSE 100, its market capitalisation now sits at about £6.87 billion.
Reuters
01-08-2025
- Business
- Reuters
UK's Melrose beats operating profit estimates on strong defence demand
Aug 1 (Reuters) - GKN Aerospace owner Melrose Industries (MRON.L), opens new tab reported first-half adjusted operating profit above market estimates on Friday, bolstered by rising defence and civil aerospace demand. While rising geopolitical tensions are fuelling defence spending and growth for aerospace suppliers, U.S. President Donald Trump's sweeping tariffs are forcing companies like Melrose to reassess their supply chains and negotiate pricing. Melrose, which gets about 50% of its revenue from North America, said it had largely mitigated its direct exposure to tariffs through changes in the supply chain structure and other actions. The company reported 310 million pounds ($409.17 million) in adjusted operating profit for the first half of the year, compared with analysts' estimate of 299 million pounds, according to a company-compiled poll. Melrose maintained its 2025 forecast on a constant currency basis. ($1 = 0.7576 pounds)
Daily Mail
16-05-2025
- Automotive
- Daily Mail
Detroit buyer of Dowlais eyes secondary City listing after takeover
The US automotive supplier buying Dowlais Group is planning a secondary listing of its shares in London after the deal goes ahead. American Axle & Manufacturing agreed to acquire the car parts producer in a $1.4billion (£1.2billion) deal announced in January, just two years after Melrose Industries spun Dowlais out of its GKN Automotive division. American Axle said at the time it would seek to cancel the trading of Dowlais shares in London and list the enlarged firm on the New York Stock Exchange. However, the Michigan-based business now wants a secondary listing of its shares in the UK capital as part of the acquisition. It said this would 'ensure a greater range of both existing and prospective shareholders are able to access the future value creation opportunity of the combination'. American Axle's pursuit of Dowlais follows choppy electric vehicle demand and increasing competition from Chinese automakers, which benefit from generous public subsidies and large domestic demand. The enlarged group will benefit from greater scale and diversification, and create the financial strength to boost investment in new products and technologies. Following the deal, the merged group will have 50,000 staff members, with around 1,250 staff at risk of redundancy. Among the jobs threatened with the axe are duplicate head office, administrative and senior management positions, as well as research and development jobs in the US and Europe. Dowlais' London office in Victoria will also shut down, while its chief executive, Liam Butterworth, will stand down after gaining a £928,500 payment. In a statement on Friday, American Axle said both firms 'continue to believe that the strategic rationale for the combination remains compelling'. It added that the transaction 'will create a stronger business that is resilient across customers, geographies and products, resulting in the combined group being better positioned to navigate and succeed in an increasingly dynamic automotive industry and macroeconomic environment',. Dowlais Group shares were 0.8 per cent higher at 67.8p on Friday morning.
