(Alliance News) - CT Automotive Group PLC on Monday said that its gross margin had been negatively impacted by Covid-19 related issues and inflationary cost pressures.
Shares in CT Automotive were down 22% at 115.00 pence on Monday morning in London.
The company said that its underlying trading performance was in line with expectations but noted that its gross margin during the period was impacted by two primary factors.
The first was Covid-related lockdowns in China and associated freight disruptions, which resulted in delayed shipping for the group and an additional USD1.6 million in costs.
The second was inflationary cost pressures and a shortage of labour at its UK manufacturing facility, which became loss-making in the half.
As a result, CT Automotive said it has taken the decision to cease its UK manufacturing operations, which accounts for 5% of total revenue.
Nonetheless, the company said that this would only result in a "very modest" exceptional charge on its first-half accounts.
This is because, CT Auotmotive explained, the production of its core components in the UK is being relocated to the group's existing overseas facilities, and as a result the revenue would not be materially impacted by the closure.
The company said revenue in the first half of 2022 was ahead of expectations at USD55 million despite reduced vehicle production volumes as a result of semiconductor shortages.
CT Automotive expects a recovery in volumes during the second half of the year, however.
Looking forward, the company said it expects is gross margin to be stronger than originally forecast thanks to increased sales.
"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," said Chief Executive Scott McKenzie.
CT Automotive designs, develops and supplies interior components to the automotive industry. It will publish its interim results in mid-September.
By Heather Rydings; heatherrydings@alliancenews.com
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Ct Automotive (CTA)