Mersey brake disc maker wins £27.5m deal

Knowsley-based Surface Transforms has secured a ‘game-changing’ deal to supply its carbon ceramic brake discs to a global auto manufacturer. Tony McDonough reports

car, auto, wheels
Surface Transforms supplies carbon ceramic brake discs for high performance vehicles

 

Merseyside high performance brake disc manufacturer Surface Transforms has secured a “game-changing” deal with a global vehicle maker worth £27.5m.

Running from 2021 to 2024, with a possible extension beyond that, the contract with the unnamed automaker will see Knowsley-based Surface Transforms become the standard fit, sole supplier of the carbon ceramic brake disc on both axles on a specific model.

The lifetime revenue on this specific vehicle model contract, starting in the summer of 2021, is estimated to be approximately £27.5m. In line with normal automotive practice, there are no minimum values in the contract.

Forecast production volumes in the contract show a ramp up to full series volume starting in 2021 with annual revenue being approximately £8m a year for the following three years. The contract currently covers series production to 2024 but may potentially be extended.

Whilst the one-year period to start of production is shorter than historically seen, the company has the capacity to fulfil this large contract, albeit with some accelerated timing of previously planned capital expenditure.

Surface Transforms says the deal will see its projected turnover double in 2022 and will require investment in new people, investing an extra £500,000, £1.3m and £2m in 2020, 2021 and 2022 respectively.

AIM-listed Surface Transforms says that, despite the COVID-19 crisis, it has seen sales continue to grow this year and raised its annual revenue forecast by £400,000 to around £2m.

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.

“This is a very good day for Surface Transforms and we look forward to further extending our relationship with this major new customer and making further contract announcements.”

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