REG - Velocity Composites - US $100M GKN Agreement

Velocity CompositesAnnouncement

20/12/2022 07:00

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RNS Number : 2338K  Velocity Composites PLC  20 December 2022

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20 December 2022

 

VELOCITY COMPOSITES PLC

("Velocity or the "Company")

 

FIRST ENTRY INTO THE US MARKET WITH US$100M GKN AGREEMENT

Velocity Composites plc (AIM: VEL), the leading supplier of composite material
kits to aerospace and other high-performance manufacturers, is delighted to
announce the signing of a five-year Work Package Agreement ("WPA") with
GKN Aerospace (the "Agreement") in the United States expected to be worth in
excess of US$100 million in revenue over five years.

The investment required to deliver the Agreement will come from Velocity's
existing resources. To support this international expansion, the Company is
developing its first advanced manufacturing facility outside of the United
Kingdom, in the State of Alabama, which will deliver the Agreement.

GKN Aerospace is a global leader in the use of composite materials in
aerospace engineering structures. The collaboration with GKN Aerospace will
utilise Velocity's advanced Velocity Resource Planning ("VRP") technology and
supply chain services to support GKN Aerospace's sustainability and efficiency
objectives in the aerospace industry. Such initiatives are seen as vital in
the industry's push to achieving significant environmental and sustainability
improvements this decade.

The initial revenues for the Company under the Agreement are expected to
commence in Q1 FY2023 and will continue through to FY2028.

The work being undertaken by Velocity will cover a diverse range of
high-performance composite structures across military, civil, and business jet
programmes.

The work will be undertaken at a new advanced manufacturing facility currently
being developed by Velocity. The 40,000 sq. ft facility is close to the GKN
Aerospace site in Alabama and has been upgraded to the Velocity-required clean
room standard. The upgrade includes the Company's proprietary digital
technology and latest manufacturing systems.

Work on the facility is at an advanced stage, and it is expected that site
approvals and first article tests will be completed by the end of February
2023, followed by volume production under the Agreement in Q1 2023, with all
programmes expected to be transferred to Velocity under the Agreement by Q3
2023. Velocity plans to train and employ up to 30 local staff, supported
initially by existing staff from the UK.

The Agreement builds on Velocity's long-standing relationship with GKN
Aerospace which started in 2015 and includes existing contracts at three of
GKN Aerospace's UK sites, including Bristol, Luton, and the Isle of Wight.
This is the first time that Velocity has worked with GKN Aerospace outside of
the UK, and represents Velocity's first entry into the US, the largest
aerospace manufacturing market in the world.

Andy Beaden, Chairman of Velocity, said:

"This is a major milestone for Velocity as we make a permanent entry into the
US market and expand our long-standing relationship with GKN Aerospace. During
the pandemic, we worked hard to deepen our relationships with clients and
further invest in our technology to prepare for the recovery.

"We believe this Agreement will be part of a long-term positive trend from
which Velocity will benefit, as customers look to recover from the pandemic
and to achieve new and improved ways of working, with a key focus on
sustainability, as production rates increase to pre-pandemic levels.

"We expect a step change in the use of carbon fibre in aircraft structures to
improve fuel efficiency and deliver greater sustainability in the move to net
zero. We believe this will increase the adoption of Velocity's technology and
services to improve manufacturing efficiencies and inventory supply lead
times.

"As a Company with its roots firmly in the North of England, this Agreement is
a significant endorsement of both Velocity's, and the region's, manufacturing
expertise from one of the world's leading aerospace suppliers. In the future,
we look forward to expanding further in the US."

 

Enquiries:

 

 Velocity                                +44 (0) 1282 577577

 Andy Beaden, Chairman

 Jon Bridges, Chief Executive Officer

 Adam Holden, Group Finance Director

 Cenkos (Nominated Adviser and Broker)   +44 (0) 20 7397 8900

 Katy Birkin

 Ben Jeynes

 George Lawson

 SEC Newgate (Financial Communications)  +44 (0) 7540 106 366

 Robin Tozer / George Esmond             velocitycomposites@secnewgate.co.uk

About Velocity Composites

Based in Burnley, UK, Velocity Composites 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,
Safran 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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