Surface Transforms (SCE) , a manufacturer of carbon fibre reinforced ceramic automotive brake discs, has been awarded a new business contract worth £100 million to supply carbon ceramic brake discs to an existing customer described previously as "OEM 10", one of the world's largest automotive OEMs.
Surface Transforms has been selected as the exclusive supplier of carbon ceramic brake discs for a range of new electric vehicles with common axles, both as standard fitment and as an option. This contract is expected to generate lifetime revenue exceeding £100 million over 7 years, with series production beginning in 2027.
The addition of this contract to the company's portfolio increases its awarded lifetime contracts to over £390 million.
To fulfill the demands of the OEM 10 contract, Surface Transforms will need to expand its production capacity beyond the current factory footprint and the phase 2 investment program, which is set to provide £75 million in annual sales capacity by 2025. The brake disc manufacturer added it is actively planning the third phase of expansion to achieve a total sales capacity of £150 million per year.
Kevin Johnson, CEO commented: "This most welcome nomination, is the Company's largest to date, deepening our relationship with the customer. The selection process was intensely competitive and set against the recent Surface Transforms production ramp-up challenges. This success further illustrates the advanced technical capabilities of our products.”
“The trend for follow-on awards with existing customers is something we have seen across all our customers. Our healthy prospective contract pipeline is mainly made up of existing customer programmes and is expected to continue to fuel our growth and capacity expansion plans into the future".
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Surface Transforms develops and produces carbon‐ceramic material automotive brake discs. The company is the UK's only manufacturer of carbon‐ceramic brake discs, and only one of two mainstream carbon-ceramic brake disc companies in the world, serving customers that include major OEMs in the global automotive markets.
In light of net zero targets, the automotive market is undergoing rapid change as an increasing number of vehicles become electric. Environmental regulations requiring reduced pollution from brakes, coupled with weight reduction particularly needed on electric vehicles have heightened demand for Surface Transforms’ products.
In its latest results, Surface Transforms saw a 15% boost in revenue, reaching £3.3 million compared to £2.9 million in H1 2022. Gross profit also saw a 14% increase, reaching £2.0 million (H1 2022: £1.7 million), with a steady margin of 60%. Cash balance as of June 30, 2023 decreased to £4.5 million from £14.9 million at the end of December 2022.
SCE shares gained 7% on today's announcement.
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