Specialist automotive testing equipment firm AB Dynamics today said it expects to make further financial and strategic progress this year despite having to write off around £16m related to its Chinese operations.
The Bradford on Avon-headquartered group, which designs, manufactures and supplies advanced testing, simulation and measurement products to the global transport market, said its business in China had suffered significantly weaker-than-anticipated volumes under a new contract with a European original equipment manufacturer (OEM).
In a trading update for the half year to 28 February, the group reported that the customer had faced challenging local market conditions, resulting in a halving of revenue to less than £3m for the period.
In light of this, AB Dynamics said it would record an impairment of its Chinese testing services business and undertake a strategic review of that business during the second half of the year.
It added that the impairment charge, likely to be around £16m, would be recorded as a non-underlying item in its 2026 half-year results. It is also to launch a strategic review of the operation.
Overall, positive trading in the final quarter of FY25 had been continued into the first half of FY26, with group order intake in the period of £64m against £66m last time.
Group revenue in the first half was approximately £49m, in line with expectations, and consistent with its previously guided trading performance weighting of approximately 40%/60% towards the second half of the current year, it added.
Underlying demand drivers remained strong for its testing products business with customer activity described as encouraging during HY26, particularly in Asia Pacific and North America. Demand for its suspension parameter measuring machines continued to grow, with additional orders received during the period for delivery in the second half of the year and early FY27.
Trading momentum in its simulation business was positive, bolstered by a previously announced €9.7m contract to supply equipment to a major European OEM, as well as a strong trading period for our simulation software business.
AB said its financial position remained “robust” with net cash of £39.3m on 28 February 2026, against £27.2m at the same stage last year. This provided significant flexibility for it to take advantage of its “organic investment opportunities and active pipeline of potential acquisition targets”, it added.
Looking ahead, it said the fact that it was “geographically diversified, OEM and powertrain agnostic [and] selling into R&D and testing functions”, provided resilience against short-term automotive industry production headwinds.
Future growth prospects remained supported by strengthening long-term structural and regulatory growth drivers in active safety, autonomous systems and the automation of vehicle applications, it said, which were underpinning its medium-term financial objectives.
“We are continuing to invest in new product development and have the capacity to accelerate progress with further value creating acquisitions,” it said, adding that it remained “mindful of any increased short-term macroeconomic disruption driven by geopolitical events”.
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