Surface Transforms scores tier-one supply contract with global vehicle manufacturer

Carbon ceramic brake discs manufacturer Surface Transforms said on Monday that it had been selected as a tier-one supplier to a mystery global vehicle manufacturer, referred to only as OEM 8.

Surface Transforms said the lifetime revenue on the vehicle model contract, commencing in the summer of 2021, was estimated to be approximately £27.5m but said there were no minimum values in the contract.

Forecast production volumes in the contract showed a ramp-up to full series volume in 2021, with annual revenue being approximately £8.0m per year for the following three years, and noted that while the contract currently covered series production through to 2024, Surface Transforms added it may potentially be extended.

While Surface Transforms noted the production was shorter than historically seen, leading it to increase manufacturing support headcount, the group stated it had the capacity within its existing Small Volume Production Cell and OEM Production Cell One to fulfil the contract, albeit with some accelerated timing of previously planned capital expenditure.

Chief executive Kevin Johnson said: "This, truly game-changing, award builds upon the recent trend of significant contract wins with mainstream automotive manufacturers.

"The award, which on its own, doubles previous revenue projections for FY22 and accelerates Surface Transforms' transition into profitability and operational cash generation."

Elsewhere, Surface Transforms added that OEM and retrofit sales had continued to grow despite the Covid-19 pandemic and said it now anticipates full-year revenues will be approximately £400,000 higher than market expectations.

As of 1030 BST, Surface Transforms shares had surged 71.43% to 42.0p.