Velocity Composites shares (LON: VEL) plunged over 18% on Tuesday morning after the group shared a trading update for the year to 31 October.
The group trading for the first four months of the year to 31 October 2020 was in line with management expectations, however, the remainder of the year is likely to be impacted heavily by the effects of the pandemic.
Sales revenues fell from £24.2m to £13.6m and the group expects to report an adjusted EBITDA loss for the year of approximately £1.8m.
In the trading update, the group said: “Despite current challenges Velocity has made excellent progress in its new business development, particularly with its long-term customers and reduced revenues have been as a result of lower levels of end client activity, not by virtue of client losses. Even with a slow recovery in build rates, and with further disruption throughout this winter, it is now once again realistic to foresee growth in the future.”
Over the course of the pandemic, Velocity carried out a cost-savings programme and reduced staff numbers by 40%.
Jon Bridges, chief executive of Velocity Composites, said: “Clearly 2020 has been an unprecedented year in the aerospace industry due to the global 70% reduction in air travel and the OEM’s immediate reduction in aircraft production rates to minimal levels. Our collaborative approach between Velocity, our customers and the raw material suppliers has sought to mitigate the impact of this.
“We continue to work with all parties to ensure Velocity is rightsized to deliver on our current programmes whilst continuing to respond to new business opportunities to support our customers as they look even harder to reduce costs. Whilst the immediate disruption is painful, our customer proposition is even more relevant and there are positive signs that the recovery will start in 2021 and through 2022. The changes we have made allow us to weather the disruption and be in a stronger position as both production rates and new business combine to return the company to pre-pandemic levels with a resilient and focused team,” he added.
Velocity Composites shares (LON: VEL) are -12.50% at 14,00 (1033GMT).