- US imposed tariffs of 25% on automotive parts imports earlier this year
- GKN Automotive owner will be bought by American Axle & Manufacturing
GKN Automotive owner Dowlais Group revealed a cash burn of £29million for the first half of the year on Thursday after the US imposed hefty tariffs on car part imports earlier this year.
It comes as Dowlais, which makes driveline systems and other automotive parts, prepares to be acquired by US auto parts giant American Axle & Manufacturing in a £1.2billion deal announced in January.
Dowlais posted an adjusted free cash outflow of £29million for the six months to 30 June, compared with a £10million inflow last year, after US President Donald Trump imposed a 25 per cent levy on imports of everything from engines, to body parts and fasteners.
It said the cash flow result on was ‘primarily driven by the impact of tariffs….higher restructuring outflows’ and the timing of dividend receipts from its Chinese joint venture.
US tariffs on the automotive sector have forced a number to revise forecasts, shift production plans, and temporarily shut down plants.
Dowlais told investors in May its annual profits would likely come in at the lower end of previous guidance, citing increased economic uncertainty stemming from recent US tariffs.
It comes as Dowlais prepares to be acquired by US auto parts giant American Axle & Manufacturing after a £1.2billion deal announced in January.
It said at the time it plans to offset additional costs by passing them on to customers, with cost recovery expected to mainly happen in the second half of the year.
On Thursday the group posted a 1.6 per cent decline in adjusted revenues to £2.46billion, but adjusted operating profits increased by 11 per cent.
‘Lower volumes and tariffs, which were lower than initially anticipated, was more than offset by the benefits of global footprint restructuring initiatives and other ongoing performance improvement actions,’ Dowlais said.
Boss Liam Butterworth added: ‘We delivered a solid first-half performance, with continued margin expansion despite ongoing macroeconomic uncertainty and market volatility.
‘Our ability to grow profitability despite lower volumes and tariff-related impacts highlights the resilience of our operating model and the strong execution of our restructuring and performance initiatives.’
Dowlais shares opened 0.4 per cent higher at 70.9p.
American Axle & Manufacturing takeover
Dowlais also told investors on Thursday it had so-far received nine regulatory approvals or clearances for its takeover by American Axle & Manufacturing, and will ;actively engage with regulatory authorities to obtain all remaining approvals’.
Following its approval at a recent shareholder meeting, the combination is expected to take effect in the final quarter of 2025.
American Axle & Manufacturing agreed to acquire the car parts producer in a $1.4billion (£1.2billion) deal announced in January, just two years after Melrose Industries spun Dowlais out of its GKN Automotive division.
American Axle said at the time it would seek to cancel the trading of Dowlais shares in London and list the enlarged firm on the New York Stock Exchange.
However, the Michigan-based business now wants a secondary listing of its shares in the UK capital as part of the acquisition.
It said this would ‘ensure a greater range of both existing and prospective shareholders are able to access the future value creation opportunity of the combination’.
American Axle’s pursuit of Dowlais follows choppy electric vehicle demand and increasing competition from Chinese automakers, which benefit from generous public subsidies and large domestic demand.
Following the deal, the merged group will have 50,000 staff members, with around 1,250 staff at risk of redundancy.
Among the jobs threatened with the axe are duplicate head office, administrative and senior management positions, as well as research and development jobs in the US and Europe.
Dowlais’ London office in Victoria will also shut down, while its chief executive, Liam Butterworth, will stand down after gaining a £928,500 payment.
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This article was originally published by a www.dailymail.co.uk . Read the Original article here. .