Multimillion-pound deal clinched by specialist ceramic brake firm

Brake specialist Surface Transforms has welcomed a “very good day” after confirming its latest contract win worth almost €12m.

The Knowsley-based manufacturer of carbon brakes for high performance cars and aircraft today announced its selection as a tier one supplier of a carbon ceramic brake disc to a major German automotive company.

The company has previously been described by Surface Transforms as “OEM 5”. OEM stands for original equipment manufacturer.

It said the final stage of the selection process is the signing of a master purchase agreement which is anticipated to take approximately four-eight weeks to finalise. However, the principal commercial terms are already agreed.

Surface Transforms will be the sole supplier of the carbon ceramic brake disc option on one axle of a new edition of an existing well-known model of German OEM 5.

The existing model already uses carbon ceramic discs as an option and therefore the forecast production volumes reflect this experience.

The lifetime revenue on this specific car model contract is estimated to be approximately €11.8m, commencing in October 2021. Annual revenue is estimated to be approximately €2m per year before tapering off during 2026.

Surface Transforms said that, in addition, while this selection is the first with German OEM 5, the commercial understanding embraces the opportunity to be selected for further multiple vehicle platforms in the customer’s portfolio over time.

These potential awards could generate revenues of many times the value of this first contract.

Following entering into the agreement, the ceramic brake disc product will be part of German OEM 5’s approved product list and while there will always be testing on new models, these tests are more about sizing and system integration than product evaluation.

Moreover, pricing has been agreed across the potential range of platforms providing a link between increasing volumes and reduced product pricing.

Today’s announcement said: “The customer has stated that the potential for further model-by-model awards will reflect their experience of Surface Transforms’ supply chain and quality performance.”

Chief executive Kevin Johnson said: “This award is the culmination of 15 years of technical innovation and shareholder support. We are delighted with the news and want to thank both our employees for their efforts during this period and our shareholders for their support through the ups and downs of that journey.

“We also want to thank the customer for their professionalism throughout the whole evaluation process, the outcome of which has validated our claims of technical superiority.

“We fully understand their decision to issue further contracts on a model-by-model basis as their facelifted or new model cars go into production.

“We are confident that Surface Transforms’ supply chain and quality performance in the intervening period, combined with the already agreed competitive pricing, will make their decision an easy one.”

He added: “This is a very good day for Surface Transforms and we look forward to further extending our relationship with this major new customer.”