The investment in sales and marketing at advanced surface coating technology firm Hardide (LON:HDD) is starting to pay off.
In its interim results, the group flagged up its first orders from customers in Italy and Germany, which are new markets for the group.
The group plans to keep the marketing push going, seeing education and awareness as major factors in increasing the company’s top line.
“We are essentially problem solvers,” chief executive officer Philip Kirkham told Proactive Investors.
“We need to make people more aware of the unique properties of our service, so that they come to us for solutions,” he said.
The company’s coating technology “has a quite unusual spread of applications”, Kirkham noted, but in essence its purpose is to reduce wear and tear on machinery.
Traditionally the oil & gas industry has been a big customer, as has the flow control (i.e. pumps & valves) sector, but the company is keen to beef up its presence outside of these sectors, and has been heartened by receiving the first volume orders for parts for a new type of airport 3D X-ray baggage scanning machine that has now gone into production with a global manufacturer in this sector.
“We couldn’t have sat down and targeted that market,” suggests Kirkham, “but when people have a problem they come to us.”
The company said demand this year is returning to more typical levels after destocking by a major customer.
Revenue in the six months to 31 March rose 4% to £1.31mln from £1.26mln in the corresponding period of the previous financial year.
The reported loss before tax widened to £236,000 from a loss of £102,000 the year before, after the group took a strategic decision to increase expenditure on business development and technical staffing.
The number of customer accounts has increased by 32% from 38 to 50 since September 2013, the company revealed, which will go some way to reducing the company’s dependence on a few key customers.
The company ended the reporting period with cash in the bank of £0.94mln.
“We’re not burning up cash at a massive rate,” finance director Peter Davenport told Proactive Investors.
“People make the assumption that, if you are expanding revenue, you automatically require more working capital. That’s not the case for us,” Davenport asserted.
He also noted the company’s high operational gearing means a large proportion of any revenue increase falls through to the bottom line.
The company signed a major supply agreement with General Electric (GE) in March and the benefits of that deal, plus the new orders from the new customers in Italy and Germany, should start to feed through later this year.
City stockbroker finnCap has initiated coverage of the stock, saying the interim results show good progress and that the company “is at a turning point”.
“The resumption of more typical purchasing patterns at its largest customer in oil and gas should have a material impact this year. The two-year contract (with an option to extend up to five years) with GE also has the potential to be extended to other parts.
“First sales of a new super-abrasive coating to the oil and gas sector were achieved. Thereafter, the most significant opportunities rest with the programmes with AugustaWestland and Airbus gaining customer approval and converting them into orders, the scale of which could be game changing.
“Further out we expect that further customer orders are likely to be gained across a number of end-user industries,” finnCap’s David Buxton said.
Kirkham is optimistic about the company’s prospects as word gets around about its services.
“We’re just scratching the surface,” he said, before realising that was probably not the best phrase for a surface coating technology firm to use.