Velocity Composites Ltd (AIM:VEL) has revealed a 19% increase in first-half revenue amid positive developments in the aerospace sector.
In its unaudited results for the six months ending 30 April 2023, the leading supplier of composite material kits to aerospace and high-performance manufacturers, reported revenue of £7.0mln, up from £5.9mln in the previous year.
The rise in revenue was attributed to the ongoing recovery of aerospace sales volumes, aided by an improvement in UK demand.
However, the company's gross margin slightly decreased to 21.8%, compared to 23.5% in 2022, a result of the delay in passing on inflation costs to customers. Velocity Composites said it has since agreed on price increases that are expected to facilitate a greater cost recovery in the second half of the year.
The company reported an EBITDA loss of £0.9mln, which includes £0.5mln in upfront costs for setting up the US facility and new contract engineering expenses. The loss before tax amounted to £1.4mln.
As of 30 April 2023, Velocity Composites had £1.2mln in cash at the bank, down from £2.0mln at the same stage in the previous year.
Operating highlights included the US facility commencing production of the first kits as part of the five-year Work Package Agreement announced with GKN Aerospace in December 2022.
The contract with GKN Aerospace is projected to generate revenue in excess of US$100mln over the next five years. The company also expanded its UK production to meet the growing demand from customers and reported a robust pipeline of new business in the US and Europe.
In the results statement, Andy Beaden, chairman of Velocity Composites, expressed his satisfaction with the progress made by the company, commenting: "Velocity is making excellent progress. Aerospace volumes continue to recover, and our US facility has started to manufacture production kits for GKN."
Beaden also highlighted the significant increase in the value of commercial business under contract and anticipated substantial revenue growth in the coming years, particularly in North America.
The company remains focused on achieving profitability in fiscal year 2024 through the ramp-up of existing contracts and technological advancements.