Adds share milestone in paragraph 2, analyst comment in paragraph 4

By Chandini Monnappa

May 8 (Reuters) - British auto parts supplier Dowlais DWL.L said on Thursday it expects full-year adjusted revenue and operating margin in 2025 to be towards the lower end of its forecast, citing continued market volatility.

Shares in Dowlais, which makes driveline systems and other automotive parts, hit a six-week high, with analysts saying its trading update was "realistic" given the current macroeconomic environment, where U.S. tariffs have hit carmakers hard.

The company's shares rose as much as 3.9% to a six-week high at 64.95 pence, before trading 2% higher by 1159 GMT.

Analysts at Jefferies said that the latest guidance was "realistic/sensible" compared to other supplier updates, and a good outcome given the backdrop.

The company in its full-year results had forecast 2025 revenue as flat to a mid-single-digit adjusted decline and an adjusted operating margin of 6.5% to 7.0% on a constant currency basis for 2025.

U.S. President Donald Trump's tariffs have sparked weeks of instability in the auto industry, prompting automakers to revise forecasts, shift production plans, and temporarily shut down plants.

Dowlais said it would pass on tariff-related costs to its customers, and it expects this to happen mainly in the second half of the year, leading to a weaker trading and cash flow performance in the first half.

"Looking ahead, we expect to fully recover the direct impact of current tariffs," CEO Liam Butterworth said in a statement.

Dowlais owns GKN Automotive, mainstay of British engineering, which has changed hands multiple times since 2018, when it was taken over by Melrose MRON.L.

In 2023, Melrose spun off GKN's automotive and powder metallurgy businesses by listing Dowlais - named after the village in South Wales where GKN was founded.

Dowlais in January agreed to a takeover by Detroit-based American Axle & Manufacturing AXL.N in a deal valued at $1.44 billion.

In the first quarter, revenue from the group's China joint venture rose by 11% year-on-year, which Jefferies analysts said was a "key highlight".

(Reporting by Chandini Monnappa in Bengaluru. Editing by Nivedita Bhattacharjee and Jane Merriman)

((Chandini.M@thomsonreuters.com; +918061822697;))