# CT Automotive revenues ahead in H1, production recovery gaining momentum

- Link: https://www.directorstalkinterviews.com/ct-automotive-revenues-ahead-in-h1-production-recovery-gaining-momentum/4121077516
- Published: 2022-08-15T07:15:44+01:00
- Author: Giles

**CT Automotive plc** ([LON:CTA](https://www.directorstalkinterviews.com/company/ct-automotive-group-plc/cta.l)),
a leading designer, developer and supplier of interior components to the global 
automotive industry, has today provided an update on its financial performance for
the half year ended 30th June 2022 and the outlook for the full year.

**Trading Performance**

Revenues for H1 2022 were ahead of the Board’s expectations at c.$55 million. Reduced
vehicle production volumes seen in H2 2021, primarily as a result of semiconductor
shortages, continued into H1 2022 as anticipated, with signs of the expected recovery
in volumes building in the second half of the current year.

While the Group’s underlying trading performance was in line with expectations, 
gross margin in the period was impacted by two non-recurring items. Firstly, Covid-
related lockdowns in China in H1 2022 and the associated disruption to freight resulted
in the Group experiencing delayed shipping which required an increase in the use
of air freight to ensure customer demand was met. While the majority of this cost
was passed on to customers, the Group incurred an additional c.$1.6 million of freight
costs. This issue was resolved by the end of the first half, with a return to normal
shipping methods.

Secondly, inflationary cost pressures and a shortage of labour has led to the Group’s
UK manufacturing facility becoming loss-making, impacting H1 gross margin by c. 
$1.7 million. The Board has therefore taken the decision to cease the UK manufacturing
operations, which accounted for c.5% of Group revenues. Production of the core components
in the UK is being relocated to the Group’s existing overseas facilities, such that
Group revenues will not be materially impacted by the closure. This will result 
in a very modest exceptional charge related to the closure in the H1 2022 accounts.

**Outlook**

The Board expects global vehicle production volumes to continue to recover during
2022 and automotive supply chain issues to resolve fully in 2023. The latest indicators
are showing a stronger step up in production for the Group in H2 2022 than previously
expected.

While the delivery of current OEM production schedules for H2 2022 would enable 
the Group to meet expectations for FY22, the Board is mindful of the possibility
that the continuing macroeconomic uncertainty and any changes in timing or demand
levels could impact the H2 trading performance.

H2 2022 gross margin is expected to be stronger than originally forecast, with increased
sales driving economies of scale within manufacturing operations, combined with 
efficiency initiatives delivered since IPO. Once fully implemented, these efficiency
initiatives will provide benefits to the business into FY23 and beyond. As a result
of these initiatives and production volume indications the Board’s expectations 
for FY23 remain unchanged.

**Notice of Results**

The Group expects to announce its results for the six months ended 30 June 2022 
in mid-September 2022.

> **Scott McKenzie, Chief Executive Officer of CT Automotive, commented:**
> “We were pleased to achieve first half revenues ahead of our expectations, while
> managing one-off challenges. While automotive market and macroeconomic uncertainty
> persists, the Board remains confident that its strategy as set out at the time
> of its IPO will deliver significant growth in H2 2022 and over the coming years.”

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