Trading Update & Notice of Results

22 May 2025

Velocity Composites plc

("Velocity" or the "Company")

Trading Update & Notice of Results

Velocity Composites plc (AIM: VEL), the leading supplier of advanced composite material kits to the aerospace market, announces the following trading update for the six months ended 30 April 2025 ("H1 25"). The Company expects to report its unaudited H1 25 results on 25 June 2025.

Highlights:

· Revenue of £10.4 million (H1 24: £10.7 million)

· Adjusted EBITDA for H1 25 expected to be £0.3 million, being positive for the first time since before the pandemic (H1 24: adjusted EBITDA loss of £0.2 million)

· Pricing now aligned to prior inflationary pressures

· Cash at bank as at 30 April 2025 of £1.2 million (30 April 2024: £1.8 million)

Financial

For H1 25, Velocity expects revenue of £10.4 million, compared to £10.7 million in the same period last year, with an improved gross margin, with pricing having now recovered the full impact of prior inflationary pressures and ongoing operational efficiency improvements.

An expected adjusted EBITDA of £0.3 million for H1 25, is a positive result for the first time since before the pandemic. Revenue was lower than originally expected, because of customer production rates being less than originally anticipated, however, Velocity was able to offset this with better internal efficiencies and is now recovering all the extra costs from past inflationary pressure.

As reported previously, end customer demand, particularly in the civil airline industry, remains strong and is expected to support significant increased production rates at Airbus and Boeing. That said, in the short-term, these increases are slower than the Company had previously planned, due in part to the global aerospace market being impacted by some well reported supply chain issues. The Company is working with its customers to maintain readiness for the rate increases as they are implemented.

The balance sheet remains robust with cash at bank of £1.2 million as at 30 April 2025 and the UK invoice discount facility of £3.0 million remains unutilised. 

US Contract

In the US, the Company continues to progress the transfer of the remaining programmes to Velocity with its initial major US customer. Velocity is working with the US Customer and its ultimate OEM customer, to finalise, what is a complex qualification process, in the aero-engine sector. This involves a highly technical qualification process and revenue from the additional programmes is expected to accelerate once the approvals process is complete. Demand for these parts is strong and will help drive sales and profitability.

At the moment, the Company is not experiencing a direct impact from the recently announced tariffs, within its costs and margin. Velocity has an established manufacturing base in the US, and tariffs on material inputs affect a small percentage of US production. Any cost increases are passed through to customers under existing contractual arrangements. While the indirect effects of tariffs are unknown, Velocity could potentially benefit from US OEM and Tier 1 suppliers onshoring operations to the US from Mexico and other locations.

Customers

As announced on 12 May 2025, Velocity has secured a contract extension with a major UK Defence contractor, where the Company is seeing increased demand and opportunities to provide additional services. While older programmes for legacy aircraft are starting to phase out, new contracts are expected to offset the impact.

Outlook

In the aerospace industry, Velocity is encouraged by Boeing's acquisition of Spirit proceeding, with some sites moving to Airbus. This development should, in time, resolve some of the supply chain issues that have affected the A350 programme. Defence programmes in Europe and the US are increasing, and Defence is a sector in which Velocity expects to have a growing presence. Demand for civil aerospace programmes remains positive, with major OEMs forecasting growth.

Some of the key programmes Velocity supports, remain well below pre pandemic levels of production and the past half year saw some short-term delays in the planned production rate increases. It is prudent to expect these flat rates will continue in the short term. The Board is therefore assuming a similar level of sales revenue in FY25 to that achieved in FY24. However, the Company expects a better level of profitability, due to both efficiencies and the removal of the inflationary price pressures.

Overall, despite this short-term uncertainty, the Board believes the long-term outlook for the industry is positive, with production rate increases expected for both existing and new business to meet the strong end demand dynamics.

Jon Bridges, CEO, Velocity, commented: "We continued to improve our operating performance, where short-term delays in programmes, are being offset by improved gross margins, which reflect the work we have done to improve operating efficiency over time. We are confident about the long-term prospects for the Company, with growth expected in civil aerospace and defence programmes."

Market abuse regulations

This announcement contains inside information for the purposes of article 7 of the Market Abuse Regulation (EU) 596/2014 as amended by regulation 11 of the Market Abuse (Amendment) (EU Exit) Regulations 2019/310. With the publication of this announcement, this information is now considered to be in the public domain.

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About Velocity Composites plc

Based in Burnley, UK, Velocity is the leading supplier of composite material kits to aerospace and other high-performance manufacturers, that reduce costs and improve sustainability. Customers include Airbus, Boeing, and GKN.

By using Velocity's proprietary technology, manufacturers can also free up internal resources to focus on their core business. Velocity has significant potential for expansion, both in the UK and abroad, including into new market areas, such as wind energy, urban air mobility and electric vehicles, where the demand for composites is expected to grow.