Surface Transforms (AIM:SCE) PLC, a maker of high-performance brake discs for cars, has upgraded its annual profit guidance for 2023 to 2025 as it announced its interim results.
During the six months to June 30, 2022, the AIM-traded group was awarded a new contract with existing customer, OEM 8, worth about £100mln, which replaced a previous contract valued at £27.5mln.
Following the conclusion of volume discussions with OEM 8, Surface Transforms (AIM:SCE) said it has increased its sales guidance for the three years 2023 to 2025 by about 10% per annum, almost wholly attributable to OEM 8.
“There are some offsetting costs - approximately £0.8m p.a. reflecting additional production overheads to support sales growth; the overall effect is to upgrade forecast profitability for 2023 to 2025,” the company said in its interim results statement.
Surface Transforms saw its revenue jump by 137% to £2.9mln in the six months to end-June, although pretax losses widened to £2.5mln from £2.2mln in 2021 on higher costs.
“The commencement of OEM 8 series monthly volumes, even if slightly later than originally planned, brings Surface Transforms into profitability for the financial year ending 31 December 2022,” the company said, adding that it was profitable in June and July.
“The financial impact of this small delay in OEM 8 start of production is offset by higher than forecast development revenues with other customers. As a result, guideline profitability remains unchanged for 2022 even though sales guidance is now expected to be approximately £1.5m below previous expectations," it added.
Shares in the UK's only manufacturer of carbon‐ceramic brake discs were up 5.6% at 47.50 pence in mid-morning trade, outperforming a 0.8% dip in the FTSE AIM All-Share index.