Dowlais Group PLC, a specialist engineering group focused on the automotive sector, has released its audited results for the year ended 31 December 2023. The company reported adjusted revenue of £5,489 million, up 6.3% from the prior year, driven by volume growth in the automotive sector and inflation recoveries across the group. Adjusted operating profit reached £355 million, with a 20% increase from the prior year, and an adjusted operating margin expansion of 30 basis points to 6.5%.
The automotive segment saw adjusted revenue and operating profit grow by 7.0% and 27% respectively, achieving a 110 basis points margin improvement to 6.9%. Powder Metallurgy's adjusted revenue grew by 3.5%, with operating profit growth of 3.1%, resulting in an adjusted margin of 9.2%. However, a full review of the medium-term trading prospects of Powder Metallurgy resulted in a non-cash goodwill impairment charge of £449 million, contributing to a Group statutory operating loss of £450 million.
The company reported £93 million of adjusted free cash flow, ahead of expectations, driving a reduction in net debt to £847 million with leverage reduced to 1.4x. In line with the Group's dividend policy, the Board has recommended a final dividend of 2.8 pence per share, resulting in total 2023 dividends of 4.2 pence per share. Additionally, the Board has announced its intention to commence a share buy-back program of up to £50 million over a 12-month period commencing in April 2024.
Dowlais Group PLC also highlighted its strong automotive performance with record business wins, balanced across the Driveline and ePowertrain portfolios and customers, including traditional, Chinese, and pureplay EV OEMs. The Powder Metallurgy segment continues to transition its portfolio, with 72% of new business wins being for EV or propulsion agnostic products. The company also reported encouraging revenue growth in the hydrogen segment.
In terms of sustainability, the company has set net zero targets, with Automotive's targets validated by the Science Based Targets Initiative (SBTi) and Powder Metallurgy's submitted for validation. Progress in sustainability ratings was also noted, with Powder Metallurgy achieving a Platinum medal from EcoVadis and Automotive achieving Silver.
Liam Butterworth, Chief Executive Officer, expressed satisfaction with the company's performance, stating, "Through excellent execution we delivered on our commitments with a strong financial and operational performance, demonstrating resilience, expanding margins, generating free cash flow above our expectations and reducing our financial leverage." Looking ahead, the company anticipates Group revenues to be similar to the prior year, at constant currency, with a modest reduction in the first half offset by an improvement in the second half.