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Revenue soars but Gestamp cuts growth forecasts

Car parts maker Gestamp has seen revenues soar so far this year – but cut its growth forecasts and pledged to find new cost savings.

Gestamp's car parts factory at Four Ashes

The company, which has a large factory at Four Ashes near Wolverhampton, notched up sales in the first nine months of 2019 of 6.5 billion euros (£5.6 billion) – 6.8 per cent more than in the same period last year.

Pre-tax earnings enjoyed an even healthier boost, rising by 19.4 per cent to 234 million euros (£202 million) over the same period.

In order to do so, Gestamp outstripped the market, with Eastern Europe, North America and the South American trading bloc Mercosur the main contributors to its growth.

However, the news wasn't all rosy. The company has also pared back its growth forecasts for the full year, saying that revenue will enjoy "mid-single digit" improvement, when it had previously anticipated a high single digit rise.

Profits will also grow, but at a lower rate than revenue, and its capital expenditure plans have also been reduced from 9.5 to nine per cent of revenue.

“In order to adapt to the current uncertain auto market environment, Gestamp has moderated its capital expenditures by being more selective in the opportunities pursued," said the Spanish manufacturer's chief executive Francisco López Peña.

"However, we expect to continue to outperform the market growth rate but with a focus on free cash flow generation.

"The company keeps focused on cost efficiencies, capex moderation, headcount reduction in certain geographies and optimization of our operations."

Revenues for the third quarter were 8.7 per cent up on a year ago.

The Madrid-headquartered company has more than 100 plants in 22 countries, and two more under construction, and employs more than 43,000 people worldwide.

Gestamp opened six new production facilities in 2018 including its new Staffordshire site at Four Ashes, which is replacing its old factory in Wolverhampton Road, Cannock, which will be demolished to make way for 180 homes and 30,000 sq ft of employment space.

The new factory has state-of-the-art stamping facilities and involved an investment of £50 million.

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