Dowlais is comprised of three divisions; Automotive (drive train components), Powder Metallurgy (heat forming powdered metal into components) and the currently nascent Hydrogen business (energy storage).
Dowlais is a market leader that supplies 90% of global light vehicle manufacturers. While COVID-19-induced production lags vs 2019 levels have been damaging to growth and more significantly margins, recovery is expected in the coming years. Management are targeting c.4.5% of margin expansion, as global production recovers, costs normalise and the automotive market evolves towards electrification – current margins are just 6%.
The electric vehicle (EV) transition will present both opportunities and challenges to Dowlais. On average, an electric vehicle has 2.4 sideshafts per vehicle vs 2.1 on internal combustion engines (ICEs), which presents a greater relative growth opportunity for the business. In contrast, Powder Metallurgy produces components almost exclusively for ICEs with no obvious EV alternative – this could make the segment a drag on growth as ICEs are phased out in the coming years.
