Trading Update

8 December 2022

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS STIPULATED UNDER THE MARKET ABUSE REGULATION (EU NO. 596/2014) AS IT FORMS PART OF UK DOMESTIC LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 ("MAR").

CT AUTOMOTIVE GROUP PLC

("CT Automotive" or the "Group")

TRADING UPDATE

CT Automotive, a leading designer, developer and supplier of interior components to the global automotive industry, today provides an update on its performance for the year ending 31 December 2022 ("FY 2022").

As previously announced, trading in the first half of the year was in-line with the Board's expectations, with strong end customer demand building into Q4 as global vehicle production volumes began to recover. However, the Group has seen a re-emergence of supply chain disruption across the operating environment, including shortages in semi-conductors, and the impact of specific operational challenges at its manufacturing facilities. Delays in the start of production on new orders has also resulted in the Group incurring costs in connection with Tooling, with the associated revenue not now expected to be recognised until FY 2023 which means that related profits of c$2.5m will also not be recognised until FY 2023. As a result, FY 2022 revenues are expected to be lower than previously anticipated at c.$120m, with higher costs leading to an expected adjusted loss before tax of around $11.0m.

The enforcement of the Government's Zero-Covid policy in China resulted in the temporary closure of some of the Group's manufacturing facilities and local suppliers, leading to significant destocking and increased costs in the second half of the year as the Group incurred costs to catch up production and expedite delivery of materials from local suppliers.  

The Group continues to implement cost savings initiatives focused on improving efficiencies and margins, and reflecting the changing demand environment. The full benefits of these initiatives will be felt in FY 2023. Good further progress has been made on key initiatives focused on internal cost improvements, inflation-based customer recoveries and cash flow. This has included the successful negotiation of improved payment terms with customers and suppliers.

As at 30 November 2022 the Group had net debt of $11.6m (as at 30 June 2022: $20.2m), representing utilisation of 49% of available facilities.

Opening of new manufacturing facility in Mexico

The Group has continued to make progress on the strategic priorities set out at IPO to accelerate long-term growth. This has included the opening of its new facility in Puebla, Mexico, in July, with shipments of manufactured parts to one of the Group's longstanding customers, Marelli North America commencing in Q4. However, the Group experienced delays to the start of production at its new production facility due to the impact of continued supply chain disruption on its customers. The Group continues to receive enquiries from existing and prospective customers.  

Outlook

While automotive supply chain and macroeconomic uncertainty persists in the short-term, the Board remains confident of the long-term growth opportunity for the Group as global vehicle production volumes recover and automotive supply chain issues resolve fully.

For further information, please contact:

CT Automotive                                                                                                           via MHP

Simon Phillips, Executive Chairman

Scott McKenzie, Chief Executive Officer

David Wilkinson, Chief Financial Officer

MHP (Financial PR)                                                                                                   Tel: +44 (0)20 3100 8540

Tim Rowntree                                                                                                  

Charlie Barker

CTAutomotive@mhpgroup.com

Liberum (Nominated Adviser and Broker)                                                           Tel: +44 (0)20 3100 2000

Richard Lindley

Benjamin Cryer

Notes to editors

CT Automotive is engaged in the design, development and manufacture of bespoke automotive interior finishes (for example dashboard panels and fascia finishes) and kinematic assemblies (for example air registers, arm rests, deployable cup holders and storage systems), as well as their associated tooling, for the world's leading automotive original equipment suppliers ("OEMs") and global Tier One manufacturers.

The Group is headquartered in the UK with a low-cost manufacturing footprint. Key production facilities are located in Shenzhen and Ganzhou, China complemented by additional manufacturing facilities in Turkey and the Czech Republic.

CT Automotive's operating model enables it to pursue a price leadership strategy, supplying high quality parts to customers at a lower overall landed cost than competitors. This has helped the Group build a high-quality roster of OEM end customers, both directly and via Tier One suppliers including Faurecia and Marelli. End customers include volume manufacturers, such as Nissan, and luxury car brands such as Bentley and Lamborghini. In addition, the Group supplies electric car manufacturers, including Lucid. It has also recently started working with e.Go Mobile, a German manufacturer which plans to launch a series of small electric vehicles for the budget end of the market.

The Group currently supplies component part types to over 47 different models for 19 OEMs. Since its formation, the Group has been the only significant new entrant into the market, which is characterised by high barriers to entry.