Surface Transforms, a specialist brakes manufacturer, has doubled its production levels.
- The firm based in Knowsley achieved record daily and weekly production rates for the six months to June 30, 2024.
- Supply chain issues in April and May due toworking capital constraints were resolved following successful fundraising in June.
- Tooling and R&D costs were £2m higher in the first half of 2024 than forecast but the company remains on track to meet its targets.
- Sales guidance for 2024 remains in line with market estimates of £17.5m.
Production levels at Surface Transforms have significantly increased, the specialist brakes manufacturer announced on July 19. For the six months to June 30, 2024, the company consistently achieved record-breaking daily and weekly production levels over the past four weeks, meeting the necessary run rates to fulfil annual estimates.
Earlier in the year, the second quarter was marred by supply chain difficulties in April and May, primarily due to working capital constraints. These issues were progressively resolved during June, thanks to the company’s recent fundraising efforts. Yields, which had been lower than expected, held steady at 75%. The company is optimistic about reaching an 86% yield in Q4 2024.
Despite challenges, Surface Transforms faced higher than anticipated expenditure. Tooling and research and development costs were approximately £2m higher in the first half of 2024 than initially forecast. Although tooling costs are now decreasing, the expenses associated with improving yields will remain high for the rest of the year.
Despite these financial strains, the company maintained its sales guidance for 2024, aligning with market estimates of £17.5m. Total sales for H1 2024 were £4.6m. This figure includes the impact of no pre-production engineering revenues due to a revision in the company’s revenue recognition policy. However, the company expects to recognise £1.7m in engineering sales during the second half of 2024.
Forecasts for 2025 remain optimistic. The board believes it is on track to meet market estimates, including £28m in sales, positive EBITDA, and operational cash generation. In May, the AIM-listed company raised more than £9.5m through an open share offer, supplementing a £13.2m local authority loan dedicated to capital expenditure.
As of June 30, 2024, the company’s cash reserves stood at £5m. While this is expected to decrease by year-end, the company confirmed no additional funding would be necessary. CEO Kevin Johnson expressed optimism, stating, “The recent significant increase in daily output levels, over several weeks, is most encouraging both in terms of its consistency and recent output levels”.
Surface Transforms continues to overcome challenges and remains on track to meet its ambitious targets for 2024 and beyond.