CT Automotive H1 2025: Margin Growth and New Contracts Amid Revenue Challenges

CT Automotive H1 2025: margins up, contracts rolling in, revenue a bit lighter

CT Automotive has delivered a classic “quality over quantity” half: lower revenue, higher margins, stronger profitability on an adjusted basis, and eight fresh programme awards worth about $37 million a year. The market backdrop has been messy – tariffs, launch delays, and inventory run-downs – yet the Group is leaning into its advantage in Mexico and its AI-led efficiency push.

The headline: management says it remains on track to hit FY 2025 market expectations for profitability, even though revenue is now expected to be “slightly softer.” Longer-term volumes into FY 2026 and beyond are unchanged, with a ramp expected from Q1 2026.

Headline numbers that matter

Metric (continuing ops)	H1 2025	H1 2024	Change
Revenue	$54.1m	$60.5m	-11%
Gross profit	$16.5m	$17.4m	-5%
Gross margin	30.5%	28.7%	+180 bps
Adjusted EBITDA	$8.4m	$7.4m	+14%
Adjusted EBITDA margin	15.6%	12.2%	+340 bps
Adjusted PBT	$4.2m	$4.1m	+2%
Reported PBT	$3.4m	$3.8m	-11%
Basic EPS (continuing)	4.59c	4.7c	-2%
Net debt (ex-IFRS 16)	$12.1m	$5.8m	+109%

Note: figures are from continuing operations. Net debt excludes IFRS 16 lease liabilities (lease accounting).

Margins are doing the heavy lifting

Gross margin improved to 30.5%. That is up 180 basis points year-on-year (a basis point is one hundredth of a percentage point), and up 290 bps versus FY 2024’s 27.6% – a big move in six months. Management credits AI-led automation, digitisation, and targeted capex that reduces reliance on third-party tooling vendors.

Adjusted EBITDA margin rose to 15.6% from 12.2%, showing that operating leverage is coming through despite revenue weakness. The Group’s rule-of-thumb ROI filters for automation projects – payback within one year initially, then a two-year target – are clearly making a difference to unit economics.

Revenue dip explained: timing, not demand destruction

Revenue fell 11% to $54.1 million, mainly due to customer programme launch timing and sector-wide inventory reductions. Management is firm that there’s been “no change to long-term production volumes,” with delayed programmes expected to ramp from Q1 2026. Tooling revenue was $4.0 million (H1 2024: $4.5 million) because of milestone timing; it is expected to be stronger in H2 2025.

Geographically, Europe delivered $17.7 million, North America $14.5 million, United Kingdom $10.2 million, Asia Pacific $9.9 million, and Rest of World $1.8 million. Tariff volatility remains a factor, but it’s also creating an opportunity: customers are seeking lower landed costs and risk mitigation, which plays to CT’s strengths.

Mexico is the growth engine – and it is getting more capacity

CT Automotive secured eight new programme awards in H1, together worth about $37 million annually. Four of these were won from competitors into the Group’s Mexican facility, as customers seek USMCA benefits (United States-Mexico-Canada Agreement – favourable trade terms for North American production).

The Group invested $3.4 million in Mexico in H1, adding 15 injection moulding machines and an automated paint line. This prepares capacity for the 2026 demand ramp and supports further margin improvement via nearshoring and automation. The rationale is clear: Mexico offers cost-efficient production and a low-tariff route into the US market.

Cash and net debt: a temporary spike that already eased

Net debt rose to $12.1 million at 30 June, up from $6.2 million at FY 2024, primarily because of a delayed customer payment that hit trade receivables. That cash arrived in July, bringing net debt down to $7.4 million. With stepped-up Mexico capex in H2, management now expects FY 2025 to close in the $9-10 million range, and for net debt to “reduce significantly” by the end of 2026.

Operating cash flow was a small outflow (-$1.1 million) as working capital absorbed cash – receivables up $9.6 million and inventories up $1.1 million ahead of future programmes. Distribution costs edged up to $1.4 million given higher duty and shipping from US tariff changes, while admin expenses fell to $10.4 million thanks to prior cost actions.

Non-recurring items totalled $0.9 million: $0.3 million hyperinflation adjustments in Türkiye, $0.2 million one-off tooling amortisation, and $0.4 million severance. Adjusted metrics strip these out to give a cleaner view of underlying performance.

Outlook: profitability guidance steady, revenue a touch softer

The Board says CT Automotive remains on track to meet FY 2025 market expectations for profitability. Immediately prior to the announcement, those expectations were for revenue of $122.0 million and adjusted profit before tax of $10.5 million. Management now expects revenue to be “slightly softer,” but still sees profitability in line, helped by higher margins.

The pipeline looks healthy: the global sales team now covers every major automotive region, the RFQ book (requests for quotation) is at all-time highs, and the contractual pipeline underpins confidence in FY 2026 and beyond. Near term, H2 should benefit from tooling and engineering milestone revenues.

My take: a margin-led story with 2026 set-up, but mind the working capital

• Positives: strong gross margin progression to 30.5%; adjusted EBITDA and adjusted PBT both up; eight new contracts worth ~$37 million annually; accelerating Mexico strategy; clearer line of sight to 2026 volumes.
• Negatives: revenue down 11% and FY 2025 revenue now “slightly softer”; working capital swings drove a temporary net debt spike; tariff volatility can still nudge cost-to-serve and timing.

Overall, this reads like a business executing its plan: win programmes into Mexico, automate hard, and defend margins through cycle. The emphasis on AI, robotics and digitisation is translating into numbers, not just presentation slides. If the H2 cash discipline lands as guided and the 2026 ramp materialises, today’s margin gains could compound nicely.

What I’m watching next

• FY 2025 delivery: adjusted PBT tracking to market expectations despite a slightly lower top line.
• H2 2025 cash conversion: year-end net debt within the $9-10 million range and inventory normalisation as programmes progress.
• Mexico execution: utilisation of the 15 new moulding machines and automated paint line; incremental margin contribution.
• RFQ conversion: record pipeline is great – contract wins and start-of-production timing will be the proof.
• Costs and tariffs: distribution expenses and any further tariff impacts on duty/shipping.

Small print worth noting

• Adjusted figures exclude non-recurring items; net debt excludes IFRS 16 lease liabilities.
• Basic EPS from continuing operations was 4.59c.
• There was a $300,000 unsecured loan to a Chinese subsidiary from a company owned by the CEO, at 12.4% interest, repayable within 12 months.

Investor access

CT Automotive will host an investor presentation on Monday 29 September 2025 at 10.00am. Registration link: Investor Meet Company – CT Automotive.