Shares take a hit as Surface Transforms warns on full year revenues
Shares have dipped by more than 10% after Surface Transforms warned revenues will be “significantly short of market expectations.”
The Knowsley manufacturer, which makes high-performance brakes for the automotive and aerospace sectors, said despite considerable growth against prior year, sales will be below £3m.
This is mainly as a result of delays in the final commissioning of the upscaled production capacity at Knowsley and the associated start of the anticipated upscaling of commercial revenues expected from December.
The company said a series of minor start-up challenges has caused output delay, resulted in fourth quarter output missing target.
By December, these issues have been narrowed down to an issue with one particularly complex furnace, which the board believes will be fully resolved soon. Given December is a short month, the company is unlikely now to recover the sales gap in this financial year.
However, the company said it is important to note that these sales have not been lost, the key OEM (original equipment manufacturer) customers have not seen any impact and the revenue gap, while proportionately large in 2021, is small in relation to overall 2022 volumes and is expected to be recovered progressively through quarter one and two 2022.
As previously notified, the company won a lifetime £27.5m sales contract with an expected maturity level of £8m sales per year, commencing – later than planned – in 2022, with a customer described as OEM 8.
Again, as previously announced, the order intake for this car has greatly exceeded the customer’s original volume expectations and they have been in discussions with all the supply chain to explore the capacity availability for significant volume increases.
Continuing progress is being made on further contract awards and the company expects to make a further announcement in the near future.
Surface Transforms
Chairman, David Bundred, said: “This announcement summarises the broad position of Surface Transforms over the last three months of 2021. Excellent progress continues to be made on the strategic plan, but with work still to do on getting the new Knowsley manufacturing plant to the required daily volume all day, every day.
“It has been a tough period for all the team, but they have progressively dealt with every issue with their usually tenacity and commitment. We are confident that we are almost through this transformational period and, underpinned by the encouraging news from OEM 8, and other expected contract awards, are looking forward to 2022 with real confidence.”
Shares were trading at 42p this morning, down 20%.
