Amotiv Faces Profit Pressure Amid Market Softness and Impairments

Modest Revenue Growth Amid Challenging Conditions

Amotiv Limited, trading as AOV on the ASX, reported a 2.3% increase in revenue to $503.7 million for the half year ended December 31, 2024. This growth was primarily driven by contributions from recent acquisitions, notably in the Lighting, Power and Electrical segment, and the Powertrain and Undercar division. However, organic revenues declined by 3.0%, reflecting softness in key markets such as New Zealand and the caravan/RV sectors.

Despite the top-line growth, the company faced significant profit headwinds, with statutory net profit after tax plunging 35.8% to $33.0 million. This sharp decline was largely attributed to a $9.4 million impairment charge related to the Fully Equipped New Zealand business, alongside a $1.0 million impairment from other brand restructuring activities.

Segment Performance and Operational Efficiencies

The underlying EBITA, a key measure excluding significant one-off items, edged down 1.0% to $97.0 million. This slight contraction underscores the challenging operating environment but also highlights Amotiv's proactive cost management and operational efficiency initiatives. The Powertrain and Undercar segment stood out with a 5.8% revenue increase and a 4.8% rise in underlying EBITA, buoyed by resilient demand in the wear and repair market and successful pricing strategies.

Conversely, the 4WD Accessories and Trailering segment experienced a revenue decline of 1.9%, impacted by weak pickup and SUV sales, as well as softness in caravan and New Zealand markets. Underlying EBITA in this segment fell 8.0%, reflecting these headwinds and higher depreciation costs. The Lighting, Power and Electrical division saw revenue growth of 3.6%, supported by acquisitions and strong US market performance, though organic revenues declined due to reseller destocking and regional softness.

Financial Position and Shareholder Returns

Amotiv maintains a conservative leverage profile with a net debt to adjusted EBITDA ratio of 1.75x, providing flexibility for ongoing investments and acquisitions. Cash conversion was 76.5%, slightly below the prior period due to one-off impacts on receivables and inventory increases, but adjusted figures suggest a return to historical norms.

The company declared an interim fully franked dividend of 18.5 cents per share, consistent with the prior year, and continues its on-market share buyback program, having repurchased approximately 733,000 shares at a cost of $7.7 million in H1 FY25.

Looking Ahead: Growth and Innovation

Amotiv's outlook for FY25 is cautiously optimistic, expecting growth in both revenue and underlying EBITA driven by new business wins, product launches, and pricing actions planned for the second half. The company also anticipates benefits from restructuring and operational optimisation, alongside sustained resilience in the wear and repair market.

Corporate costs are forecast to decline year-on-year despite ongoing investments in strategic initiatives such as the Amotiv Unified program. The company also plans to host an Asian facility visit in April 2025, signaling a focus on global operational integration and growth.