20th Dec 2022 14:28
(Alliance News) - Shares in Velocity Composites PLC jumped on Tuesday after the company said trading in financial 2022 was in line with expectations, and that it signed an agreement to enter the US market.
The Burnley, England-based aerospace composite material kits supplier said revenue for the year that ended October 31 will be no less than GBP11.9 million, up by 21% from GBP9.8 million a year before, amid "encouraging" signs of stability and growth throughout the year.
Even so, contracted sales remain "significantly below" pre-pandemic levels, Velocity said. Revenue in the financial year that ended October 31, 2019 was GBP24.3 million.
Velocity Composites said revenue for financial 2022 and its contracted sales are in line with forecasted original equipment manufacturer production rates.
The company expects its loss before interest, tax, depreciation, and amortisation for financial 2022 will be GBP500,000 in financial 2022, which is flat compared to an Ebitda loss of GBP500,000 in financial 2021. Velocity Composites said the loss is in line with company expectations, following planned investments in research & development and business development activities over the last year.
Shares in Velocity Composites were up 59% to 43.00 pence on Tuesday afternoon in London. The stock hit a high earlier of 47.0p.
The company also said it signed a five-year work package agreement in the US with GKN Aerospace Services Ltd to support its international expansion. The deal is expected to be worth over USD100 million in revenue over five years, with initial revenue expected to commence in the first quarter of financial 2023 and will continue through to financial 2028.
As part of the deal, Velocity Composites is creating its first 'advanced' manufacturing facility outside the UK, in the US state of Alabama.
"Our business is now underpinned with some significant long-term contracts, that should drive growth and suitable financial returns for the significant investments made to date in the business," Velocity Chair Andy Beaden said.
"The agreement with GKN in the US not only provides us with significant long-term revenues, but also enables us to build a base from which we can target other opportunities in North America, which is the biggest potential market for Velocity in the world."
GKN Aerospace is part of the former London-listed engineering firm that was bought by Melrose Industries PLC in 2018.
By Jaskeet Briah, Alliance News reporter
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