AB Dynamics has reported FY 2018 revenue and Adjusted PBT in line with our estimates, which were revised in October when the Group announced that it would significantly exceed market expectations. Both numbers are at record levels. The Group has delivered strong performances across a number of global geographies in the ADAS (Advanced Driver Assistance System) targets and steering robot businesses, and won its first simulator order (for delivery in FY19). As ADAS complexity is increasing, further customer demand is anticipated. The announcement also notes the tailwind of a ‘healthy’ order book at the start of FY2019. Given this strong outlook, and the prospect of another year of ‘solid progress’, AB Dynamics is to make further investment in supporting the significant growth opportunity, constraining near-term operating margin. We have upgraded our FY19 and FY20 estimates materially, while assuming an increased level of investment and upgrading EBITDA at a lower rate.
Group revenue grew an astonishing 50.8% to £37.05 million for FY 2018 (FY 2017: £24.57 million) with revenue from Driving Robots of £21.09 million and from ADAS products at £11.85 million both at record levels.
Operating margins reduced slightly to 23.1% (FY 2017: 23.9%) but with revenue strong, the Group still reported 77.9% growth in reported profit before tax to £7.95 million while fully diluted EPS increased by 70% to 35.03p (FY 2017: 20.56p). A final year dividend of 2.2p – making 3.665p for the full year – was in line with our expectations.
The outlook statement is positive about both the market backdrop and the prospects for the business. Management expects solid progress in the current financial year but also highlights the need for increasing levels of investment in systems and operational capability.
The Group invested in facilities and new product development during 2018. With order intake continuing to run ahead of sales, it has flagged further investment to support new product development, personnel, marketing, service and support and its overseas operations.
The business continues to perform exceptionally well on a number of fronts, benefiting from the strong market conditions and increased scale following recent investment in capacity. Investing now, for further long term potential, seems a highly strategic move, which should yield additional revenue and margin in years to come.