Specialist brakes maker still falling short of target manufacturing levels
Knowsley-based specialist high performance brakes manufacturer, Surface Transforms, said production problems have eased, but is still experiencing small disruptions.
The firm is holding its annual general meeting in London at 10am this morning, following which, CEO Kevin Johnson will update shareholders on sales and operations progress.
In this presentation, he will reveal that manufacturing output continues to improve, but has not yet reached target levels.
Sales for the six months to June 30, 2023 are expected to be approximately £3.3m (H1 2022: £2.9m) representing an overall increase of 14%.
Within this total, the volume of manufactured discs during the period increased by more than 80%, reflecting the improvements made in production during 2023 – the remainder of the sales in both periods is pre-production development income.
The production difficulties described previously in the first quarter trading update have not recurred, but the company has continued to experience individually small production disruptions that have slowed the ramp up in output.
As previously described, the shortage of overall capacity means that any stoppage in the quarter cannot be recovered in the quarter, but will be recovered as the capacity comes on stream over the rest of the year.
The installation of additional capacity continues, and the company still expects to have excess capacity over current demand in Q4 2023.
Thereafter, the company will be adding further capacity to meet the next step change in demand as the OEM 10 contract starts production towards the end of 2024.
At the presentation the company will be stating that it continues to anticipate the benefits from both this additional capacity and ongoing resolution of the production disruptions and, therefore, reiterates previous guidance for 2023 and 2024.
Surface Transforms will issue a pre-close trading update for its half year results in July, and its full half year results in September.
Over the past 20 months the company has been installing capacity to support contracted sales from £2m per annum in 2020, to more than £30m pa in 2024.
In its April trading update earlier this year, it revealed that one furnace issue in particular significantly affected output over the past six months, exacerbated by industry-wide supply chain problems for furnace insulation.
The company subsequently made changes to that process in Q1 2023, which were successful, and that sub process had run, at target rates, for more than a month.
However, it warned that, despite overcoming production problems, it will be unable to recover the financial impact.
