REG - Velocity Composites - Trading Update & Notice of Results

Velocity CompositesAnnouncement

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RNS Number : 6852J  Velocity Composites PLC  22 May 2025

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.

 

 

Enquiries:

 

 Velocity Composites plc             +44 (0) 1282 577577
 Andy Beaden, Chairman
 Jon Bridges, CEO
 Rob Smith, Chief Financial Officer

 Canaccord Genuity Limited           +44 (0) 20 7523 8000
 Nominated Adviser and Joint Broker
 Max Hartley
 George Grainger

 Dowgate Capital Limited             +44 (0) 20 3909 7715
 Joint Broker
 Russell Cook
 Nick Chambers

 SEC Newgate                         +44 (0)7540 106 366
 Financial Communications            velocity@secnewgate.co.uk
 Robin Tozer
 George Esmond
 Harry Handyside

 

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.

 

 

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