High performance brakes maker aiming for second half rally
High performance brakes manufacturer, Surface Transforms, is expecting to break even this year, despite a first half loss, it said today.
The Knowsley-based specialist revealed that its revenue increased 15% to £3.3m in the six months to June 30, 2023. These were, however, still below target, due to technical challenges which have now been overcome.
However, its loss before tax increased to £5.5m, up from £2.5m the previous year.
Cash at June 30, 2023 was £4.5m, compared with £14.9m at December 31 2022.
However, revenues improved post-period end, with second half revenues expected to be significantly ahead of the first six months.
The business now has additional furnace capacity in place and increased proprietary know-how.
Surface Transforms said it is meeting customer demands with further OEM (original equipment manufacturer) contract awards expected in the second half of this fiscal year.
Its strategic investment programme for c.£75m capacity os progressing well, with capital expenditure of £4.8m (H1-2022: £2.8m). Phase 2 target of £50m capacity will be available in 2024.
Its strong order book is unchanged with lifetime value of contracts at £290m across 11 contracted models. New product development for customers continues in line with the contract roadmap, and the business boasts a healthy prospective contract pipeline which increased to £420m (31 Dec 2022: £393m).
The company has also commenced planning for site expansion to c.£150m capacity.
Chairman, David Bundred, said: “The steady growth in production seen throughout 2023 is expected to continue.
“Whilst H1-2023 has been operationally challenging the company has delivered considerable strategic progress. We have engineered solutions to our technical problems and brought in additional furnace capacity designed to our know-how.
“Productivity efficiencies and capacity improvements are expected to continue through 2023, a target break-even in the second half of the year, with profitability in Q4.”
He added: “We have continued to invest to reach, initially £50m sales capacity in 2024 and £75m sales capacity in the following year.
“Of greatest importance, our customers have understood our issues, including immersing themselves in our capacity plans, and remain committed to awarding the company further business. We are appreciative of shareholders support through this learning curve.”
