Velocity Composites extends contract with major Tier 1 manufacturer
(VEL ) has unveiled to investors that it has signed a new three-year contract with an unnamed major Tier 1 aerostructures manufacturer based in Hampshire.
The firm, which supplies advanced composite kitting solutions and material management services to the aerospace composites industry, said the contract is valid from 1 March 2021 until 31 August 2024 and expands upon Velocity’s long-standing relationship with the client.
While the contract reflects a UK-based partnership, Velocity told investors that it hopes to further expand this relationship with its manufacturing sites “in Europe and internationally.”
Velocity said it will continue to work alongside the customer to supply a fully managed structural material and kitting service for existing and new aerostructure work packages.
The services provided by Velocity to the Customer under the Contract have an expected annual value of £4.1m, including the awarded £1.4m of new business on the A350, A400M and Eurofighter Typhoon aircraft platforms, based upon the latest COVID-19 impacted build rate guidance, and will continue as a major contributor to revenues through to 2024, it said.
Shares in Velocity Composites jumped by 25% this morning to 25p following the news.
It highlighted that the contract includes both an extension in the term of an existing five-year agreement entered in August 2016 as well as the award of new business covering the remaining additional programmes in production at the Customer site, starting immediately.
"Execution of this Contract extension and new business award with the Customer is an important milestone for Velocity, with our key customer reaffirming and strengthening our relationship,” commented Jon Bridges, Chief Executive Officer of Velocity Composites.
He added, “Together we have been successful in leveraging our material efficiency technologies and excellent service history to provide the Customer with a more competitive and compelling offering, enabling a full offload of composite management and kitting services from the Customer to our Fareham facility.”
The contract is expected to “directly protect” existing jobs and enable new opportunities at Velocity’s manufacturing sites as it fully recovers from COVID-19’s impact on the business.
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