REG - Strip Tinning Hldgs - Trading Update & Notice of Results

Strip Tinning HoldingsAnnouncement

18/05/2022 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220518:nRSR8518La&default-theme=true

RNS Number : 8518L  Strip Tinning Holdings PLC  18 May 2022

 

This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law
by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is
disclosed in accordance with the Company's obligations under Article 17 of MAR

 

Strip Tinning Holdings plc

("Strip Tinning" the "Company" or "Group")

Trading Update & Notice of Results

 

Strip Tinning (AIM: STG), a leading supplier of specialist connectors to the
automotive sector, provides an update on trading ahead of the announcement of
its full year results for the year ended 31 December 2021 ("FY21") on 21 June
2022.( 1 )

For FY21, Strip Tinning is pleased to confirm that Group revenues and
underlying EBITDA are expected to be in line with the Board's expectations.

The Group now expects, subject to the finalisation of the accounts and the
FY21 audit, revenues to be up 29% to £11.1m (FY20: £8.6m) with underlying
EBITDA of £0.5m (FY20: £1.2m). As previously disclosed, disruption to
production associated with the global COVID-19 pandemic, increasing material,
shipping and labour costs all impacted margin in the period. In addition, the
Company made significant investment in its product development and in the
launch of EV products in 2021 and further strengthened its organisational
structure to manage planned growth.

(1) These will be the audited results for Strip Tinning Limited ("STL") the
Group's wholly owned operating subsidiary. The Company was incorporated on 6
January 2022 as Strip Tinning Holdings Limited and on 7 February re-registered
as public company changing its name to Strip Tinning Holdings plc, ahead of
its admission to AIM. The Company is the holding company of the Group. Save
for the Company and STL there are no other companies within the Group.

Business Update

The Group consists of two business lines; Automotive Glazing and Electric
Vehicle battery sub-systems ("EV"). Over 90 per cent. of the Group's
historical sales have related to Glazing systems, however the proportion of
revenue generated from the EV division will considerably increase as the
Company exploits the significant new opportunities in the fast growing EV
space.

EV

The OEM EV business is performing ahead of our expectations for FY22,
reflecting the increasing momentum in EV, with OEM plans to introduce more
EV's against a growing backlog of consumer demand.  Management are now
confident that our German OEM customer for our first EV Cell Management System
nomination will run at annual volumes approximately 33% higher than originally
envisaged, but with an expected start of volume production for the Company now
deferred from Q1 to Q2 FY23. Additionally, it is further anticipated that the
unit price will rise in line with a number of more complex engineering
specifications. Accordingly, this nomination could now have a potential value
of EUR 3.2m per annum from 2023 onwards, with a potential lifetime value in
excess of EUR 16m, an increase of 54%.  The Company has also converted an EV
Supercar opportunity, and is now the nominated battery sensing connector
supplier with an order value of £150k. We remain in dialogue with a major
Korean chemicals company and leader in the development of Lithium-ion
batteries, and as their European supply chain evolves we anticipate
opportunities will arise.

The pipeline of new opportunities also remains strong and in the last couple
of months, the Company has received 4 new RFQs, including from another major
German OEM and a multinational speciality chemicals and sustainable
technologies company. Furthermore, the Company is now working toward
development designs with a pioneering electric aviation customer and has early
stage negotiations with a UK electric trucks business.

The Company is also pleased to have recently recruited a very experienced
German business development consultant, to further develop opportunities in EV
in particular with the German OEMs. He joins from Manz AG, a German
multinational high-tech engineering company, specifically active in
automation, laser welding and assembly projects within the EV battery sector.

The EV order book for parts (mainly prototype) to be delivered within the next
6 to 9 months remains healthy, above expectations at £1.3m.

Glazing

The Board is pleased to report progress on a number of our operational
improvement plans, such as the inclusion of ex works and materials price
escalators in new customer contracts.  The Company has recently signed a new
10 year ex works supply agreement with Sisecam Automotive, our third largest
Tier One glazing customer that is forecast to deliver incremental sales of
EUR3m over this period from 2023.

However, the reported deterioration in market conditions in the automotive
sector due to a number of well publicised factors are impacting the Company's
glazing sales and profits. The European car market, which accounted for 57% of
Group sales in 2021, has seen a marked softening with passenger car
registrations declining 20.5% in March 2022, compared to the same period in
2021. Ongoing supply chain disruptions, exacerbated by Russia's invasion of
Ukraine, which has heightened the shortage of semiconductors and wiring
harnesses, and recent COVID-19 related lockdowns in Shanghai have all
negatively affected car production, with a number of OEM plants now halting
production.

The Company's glazing customers are multi-national Tier One suppliers, through
which its products reach the majority of global OEMs in multiple global
locations. This includes some OEM production facilities in Russia.  The
Company estimates that such product shipments have historically accounted, on
average, for c.10-12% of glazing revenues.  Such shipments are now materially
reduced, pending, in part, the future relocation of the relevant OEM
production.

Group Outlook

Whilst a slightly improving sales position is anticipated for the remainder of
FY22 as a result of previously won new products entering full production, the
Board now expects to deliver revenues for the FY22 consistent with last year,
in line with the wider automotive market performance.  This loss of sales
combined with strong inflationary cost pressures in materials and energy in
particular, and imbalances in our overhead costs, is impacting margins and
profitability. Great care is being taken to ensure that overheads are reduced
where appropriate in line with lower than budgeted sales, whilst retaining all
the key resources necessary for protecting the growth activities in the
business, on the EV side in particular.

In addition,  the Company is currently putting through a number of price
rises across its product range.

The Board believes that the Company retains its strong market share and is
confident in the medium-term sales outlook for the business.

Richard Barton, Group Chief Executive Officer of Strip Tinning, commented:

"We are encouraged by the improving prospects for our EV business,
particularly with the established OEMs, but it is deeply frustrating that
recent factors outside of our control will impact on our Glazing performance
this year. That said, we are performing resiliently during these very
turbulent times and continue to have a strong degree of confidence in the
medium-term prospects of the business, as illustrated by the progress made in
sales developments which will contribute to future revenue growth".

 

The person responsible for arranging the release of this announcement on
behalf of the Company is Adam Le Van, Group Chief Financial Officer.

 

Enquiries:

Strip Tinning Holdings
plc
Via Alma PR

Richard Barton, Chief Executive
Officer

Adam Le Van, Chief Financial Officer

 

Singer Capital Markets (Nominated Adviser and Sole
Broker)               +44 (0) 20 7496 3000

Rick Thompson

Will Goode

Alex Bond

James Fischer

 

Alma PR (Financial
PR)                                                                              striptinning@almapr.co.uk
(mailto:striptinning@almapr.co.uk)

Josh
Royston
          +44 (0) 20 3405 0205

Joe Pederzolli
 

 

(#_ftnref1)

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  TSTSFDFWWEESEII