(Alliance News) - Dowlais Group PLC on Tuesday cited foreign exchange headwinds and weakness in its ePowertrain business as it reported a drop in revenue in the first four months of 2024.

Shares in Dowlais fell 5.8% to 72.39 pence in London on Tuesday.

The automotive engineering spin-off of Melrose Industries PLC, which listed in London back in April, was updating investors on trading ahead of Tuesday's annual general meeting.

In the four months to April 30, Dowlais said adjusted revenue fell 1.9% to GBP1.7 billion from the same period a year prior.

Revenue growth ahead of the market in Powder Metallurgy, Driveline3 and its China joint venture was more than offset by weakness in the ePowertrain4 product group of the Automotive business, Dowlais said.

Including foreign exchange headwinds of GBP90 million, adjusted revenue fell by 6.6%.

Dowlais said that encouragingly, despite market volatility, adjusted operating margins of 6.1% in the period were up 30 basis points over the same period of the prior year, with margin expansion achieved in both Automotive and Powder Metallurgy.

"The group has continued to execute well on its strategic priorities, with continued focus on delivering operational efficiencies, amidst challenging market conditions," it said in a statement.

Automotive adjusted revenue declined 3.3% from a year ago, while Powder Metallurgy revenue rose 4.0%. In Automotive, ePowertrain adjusted revenue declined largely driven by increased volatility in battery electric vehicle production volumes.

Overall, Dowlais described the start to the year as "broadly in line with expectations." The company anticipates revenue for 2024 will be slightly below the prior year at constant currency, with performance more weighted to the second half.

In 2023, Dowlais delivered GBP4.86 billion in revenue.

Nonetheless, it remains confident in its ability to achieve operating margin expansion and grow free cash flow for the full year.

By Jeremy Cutler, Alliance News reporter

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