Shares of Liverpool-based high performance car brake disk manufacturer Surface Transforms plc soared as much as 35% on Thursday after it announced it signed a new £100 million contract with an unnamed existing customer it called “OEM 8.”
Surface Transforms is the UK’s only manufacturer of automotive carbon‐ceramic brake discs, and one of only two mainstream carbon ceramic brake disc companies in the world.
The company supplies makers of high performance cars. Its customers have included Aston Martin, Porsche, Ferrari and Nissan.
Surface Transforms CEO Kevin Johnson said: “This important announcement maintains the recent momentum of significant commercial success for our brake discs.
“This success is of course being accompanied by our parallel focus on installing and commissioning the new plant to produce this huge increase in sales, a project that is continuing apace.
“We look forward to showing shareholders the progress on both contracts and production at our Capital Markets Day in April 2022.”
Surface Transforms said in a stock exchange statement: “This contract replaces the previously announced contract from September 2020 which was valued at approximately £27.5m.
“This increased contract value of over £70m is driven by both significantly increased demand for this particular model of OEM 8 and the contract being extended to 2027.
“The contract remains priced in pounds sterling and increases the company’s sales forecast by £4m in 2023, £11m in both 2024 and 2025 and by £20m in both 2026 and 2027, taking the company’s overall lifetime order book to over £180m …
“Whilst OEM 8 delayed the SOP (now scheduled for spring 2022), the market response to the car has exceeded their order expectations; the customer has therefore been in discussions with all impacted suppliers to increase capacity and output.
“This new contract clearly has capacity and overhead implications.
“In several separate announcements, the company has said that by mid 2023 we will have installed capacity for £50m sales p.a. which is enough to accommodate the extra volumes from this new contract.
“However, our staffing and infrastructure overheads are currently in line with the previous forecast of approximately £17m sales for 2023.
“Accordingly, the company now needs to accelerate the recruitment and infrastructure actions required to support these much higher sales, which the coard currently estimates will result in current year overheads (mostly people related) increasing by £2.5m.”