A Portsmouth-headquartered developer of components for the global automotive industry is ceasing its UK manufacturing operations after the site became loss-making.
CT Automotive – which has offices across the world – brought in revenue of about $55m during its half-year to 30 June 2022, which it noted was ahead of expectations.
This was despite reduced vehicle production volumes seen in H2 2021 – primarily as a result of semiconductor shortages – continuing into H1 2022 “as anticipated, with signs of the expected recovery in volumes building in the second half of the current year”.
However, the company also noted that gross margin in the period was impacted by two non-recurring items, the first being Covid-related lockdowns in China in H1 2022 and the associated disruption to freight, resulting in the group experiencing “delayed shipping, which required an increase in the use of air freight to ensure customer demand was met”.
The second was “inflationary cost pressures and a shortage of labour” leading to CT’s UK manufacturing facility becoming loss-making, impacting H1 gross margin by about $1.7m.
“The board has therefore taken the decision to cease the UK manufacturing operations, which accounted for circa 5 per cent of group revenues,” it said.
“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.”
Looking ahead, 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.”
Chief executive Scott McKenzie said: “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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