Liverpool city region brake disc maker Surface Transforms wins £100m contract with US automotive giant – the largest deal in its history. Tony McDonough reports
Knowsley brake disc maker Surface Transforms (ST) takes its order book close to £300m after winning a £100m contract with a US automotive maker.
Spread over six years the deal, with one of the biggest automakers in the world, will see ST become a tier one supplier. And what is particularly sweet for the business is that it will supply brake discs previously supplied by its main competitor.
Starting in 2024 this is the biggest contract ST has won in its history. This new contract is the second contract with this customer. It will be the standard fit, sole supplier of the carbon ceramic brake disc on two model variants covering front and rear axles.
ST anticipates series production revenues will start in the first half of 2025. Sales from this contract award are expected to be around £20m a year, tailing off in the later years.
The current variant of this contracted model is already fitted with carbon ceramic discs provided by a competitor. The customer’s decision to replace the incumbent with Surface Transform’s discs followed a searching technical evaluation.
This latest deal raises ST’s lifetime contract pipeline value to £290m across 11 contracted models, with an average contract life of five years.
Chief executive Kevin Johnson said: “The contract is an extremely significant strategic win, achieved against vigorous technical competition.
“Moreover, it underpins the key message of our recent fundraise on the need to be installing capacity in advance of contract wins, thereby giving confidence to our customers of our ability to supply.”
In October ST, which is listed on the stock exchange’s Alternative Investment Market, said it had raised a total of £18m from its shareholders. It has also secured a £1m loan from the Liverpool City Region Combined Authority. This cash is being used to upgrade its Knowsley factory and take on more staff.
The firm makes carbon ceramic brake discs for a number of high performance cars. Customers have included Porsche, Ferrari and Nissan. It is currently supplying brake discs for the Aston Martin Valkyrie which retails at £3m.
In a trading update on Thursday the company said sales for its current fiscal year, ending on December 1, would be around £6.5m, lower than originally anticipated.
This has primarily been caused by technical issues at one of its customers. The update added: “This is clearly disappointing, but it should be noted that the total contract value remains unchanged at £100m.
“The impact is that the timing of the lifetime programme has started a few months later than originally planned and, unless caught up in the meantime, will eventually finish, a few months later than originally planned.”
ST expects profit and cash will be around £3m less than previously guided. The board anticipates the company will be profitable in November and December 2022. As per its previous guidance, the business anticipates it will be profitable in 2023.