Amotiv Eyes Stronger H2 After Navigating FY25 H1 Revenue and Margin Challenges

Overview of FY25 H1 Performance

Amotiv Limited, a diversified automotive parts supplier, released its financial results for the first half of FY25, revealing a 2.3% increase in group revenue to $503.7 million. This growth was primarily driven by recent acquisitions within the Lighting, Power & Electrical (LPE) division and strategic expansion efforts. However, organic revenue declined by 3%, reflecting ongoing challenges in the Australian and New Zealand markets, particularly in the 4WD Accessories & Trailering segment and caravan/RV sectors.

Underlying EBITA edged down 1% to $97 million, impacted by continued investment in strategic growth initiatives and restructuring costs associated with the rollout of the 'Amotiv Unified' enterprise optimisation program. Despite these pressures, the company maintained a strong gross margin of 44%, albeit down 75 basis points due to higher freight costs and an adverse product mix.

Segment Performance and Strategic Initiatives

The 4WD Accessories & Trailering division experienced a slight revenue decline of 1.9%, with organic sales down 5.6% amid weak pick-up and SUV sales in the ANZ region and softness in New Zealand. Nevertheless, margin management and productivity improvements helped maintain flat underlying EBITDA margins. Notably, new business wins totaling $16 million annually, including exports to Chinese OEMs and US customers such as U-Haul, signal promising growth opportunities ahead.

The Lighting, Power & Electrical division grew revenue by 3.6%, bolstered by acquisitions and strong US market performance through the Vision X brand. Organic revenue declined 8.7% due to destocking and market softness in ANZ, but acquisition synergies and pricing actions are expected to improve margins in the second half.

Powertrain & Undercar delivered robust results with a 5.8% revenue increase and a 4.8% rise in underlying EBITA, driven by strong filtration product volumes and price increases implemented in the prior half. The division continues to benefit from its resilient wear and repair market exposure and ongoing diversification efforts, including the launch of a new national distribution centre.

Financial Health and Capital Management

Amotiv’s balance sheet remains solid, with conservative leverage at 1.75x net debt to adjusted EBITDA and a well-managed debt maturity profile. The company refinanced debt facilities during the half, securing improved terms and reducing funding costs by approximately 80 basis points. Cash conversion was impacted by one-off working capital factors, including inventory build for new production facilities and receivables timing issues, but is expected to normalise to around 85% for the full year.

Capital expenditure increased to support capacity expansion and offshore growth, particularly in South Africa and Thailand, with FY25 capex guidance raised slightly to $25-27 million. The company also continued its on-market share buyback, purchasing approximately 733,000 shares at a cost of $7.7 million, with plans to acquire up to 5% of issued capital by October 2025.

Outlook and Market Positioning

Looking ahead, Amotiv expects a stronger second half of FY25, supported by new business wins, pricing initiatives rolling out from Q3, and operational efficiencies from the 'Amotiv Unified' program. The company remains focused on its strategic imperatives: enterprise optimisation, product development, offshore expansion, and selective bolt-on acquisitions. Its largely ICE-agnostic product portfolio and growing offshore revenue base provide resilience amid evolving automotive market dynamics, including the rise of electric vehicles.

CEO Graeme Whickman highlighted the company’s readiness to capitalise on growth opportunities, noting the successful commissioning of the South African manufacturing plant and promising contract wins in the US and Europe. Meanwhile, CFO Aaron Canning emphasised disciplined capital allocation and cost management as key to sustaining shareholder returns and funding strategic investments.