Nanoco slashes revenue forecast by 25% after key customer ends partnership

Tech company, Nanoco, said its revenues for the financial year to July 31, 2025, will be slashed by 25% after a key customer pulled out of a commercial partnership.

The consensus revenue forecast for the period is currently £9.5m, being the average of forecasts from Cavendish and Edison.

The Runcorn-based company, which develops materials used in the manufacture of monitors and TV screens and technologies for medical imaging and the early diagnosis of cancer, described its European customer’s action as “disappointing” but stressed it was due to its own strategic priorities and not a reflection on Nanoco.

Its European customer was working with Manchester University spin-out Nanoco on infrared sensing applications in electronic devices.

However, in July this year the group announced that it no longer expected to receive a further production order for its validated first generation sensing products during the financial year ending July 31, 2024, and that the group was working with the European customer to understand the range of possible outcomes and any potential impact beyond fiscal year 2024.

It has now revealed that, following further dialogue, the group now no longer expects to receive further orders for its first generation sensing materials.

In addition, the European customer has served notice on the group’s two-year Joint Development Agreement for second generation sensing materials that was previously announced in January 2024.

Nanoco said it had achieved all of the required development milestones to date and had received positive feedback on the performance of the new material.

It understands that the European customer’s decision has been based on its own strategic priorities and not as a result of concerns with the performance of Nanoco’s materials.

The group said it will be negotiating end of project terms with the European customer.

Amongst other matters, Nanoco will be seeking the removal of any obstacle to its direct pursuit of already identified small scale market opportunities.

These include sectors such as industrial, defence, agriculture, security and surveillance, healthcare, and automotive.

Following today’s announcement, the group expects revenues for the 2025 fiscal year to be approximately 25% below consensus forecasts, it said.

Nanoco reiterated that it continues to work well with its Asian customer on its Joint Development Agreement for second generation sensing materials, with the potential for production orders in the medium term, subject to end user adoption of the technology.

The group also continues with other, small-scale commercial engagements for customers interested in display materials, alongside additional new business development activities and outreach.

Nanoco’s non-executive chairman, Christopher Richards, said: “This is obviously disappointing news and reflects the nature of high technology supply chains for consumer electronics.

“It is noteworthy that our customer has taken these decisions based on its own strategic priorities and not on a lack of belief in, or the performance of, Nanoco’s technology.”

He added: “Smaller scale opportunities are available for this technology in the short to medium term and we aim to address those niche markets directly and in partnership with other companies.

“We also continue to work with our Asian customer in developing our second generation sensing materials, with commercial potential over the medium term.”

He said the group’s strong balance sheet provides it with the financial stability to continue this development work and its new business development activities.