Australia’s leading independent carbon fibre composites manufacturer, Quickstep Holdings Limited (ASX: QHL) has delivered continued sales growth in Q3 FY19 compared to the previous corresponding period (pcp). For the March 2019 quarter, the company reported sales revenue of $16.5 million which was 13% higher than pcp. Further, the sales for the nine months to the end of March 2019 were $50.4 million which are 19% higher than the prior year. The company believes that it is on track to deliver significantly higher Joint Strike Fighter (JSF) volumes over the next 18 months, with JSF revenue expected to increase around 40% in FY19.
During the quarter, the company took various initiatives across all functions at the Bankstown and Geelong sites to improve efficiency, reduce cost and improve margins. The company undertook improvements to production cycle times, visual management, process mapping and the introduction of new workplace organisation methods. It is expected that the benefits of these improvements will be enjoyed in Q4 and beyond.
During the quarter, the company entered into the equipment implementation phase for the Chemring project with machinery and tooling in the final phases of manufacture and testing prior to being delivered into the Bankstown site.
The company is having a clear focus on the US market and it is making a significant investment in business development and supply chain resources. Based on the progress of confidential negotiations, the company is expecting to see significant new business awards during the remainder of 2019.
As at 31 March 2019, the company had $7.6 million in cash and $0.8 million in restricted term deposits. Further, the company had total outstanding debt, including capitalised interest, of $10.3 million which was a decrease of $5.2 million from 31 December 2018, following repayment of the short-term working capital facility subsequent to the $10.6 million placement.
The company believes that its revenue will grow strongly over the remaining financial year as it recovers from the extended key machine failure. It is expected that Joint Strike Fight deliveries will continue to ramp up towards peak production volumes in the next twelve months. Moreover, the company expects its revenue to grow by over 22% in FY 2019, following a strong fourth quarter, and gross margins will improve year on year as the group benefits from economies of scale and increasing efficiencies.
The company is going to keep its focus on winning new customers and contracts and supporting growth through partnerships to build scale. And it will further accelerate its business development activities to win additional business, through its tiered growth strategy.
In the past six months, the share price of the company increased by 3.95% as on 17 April 2019. At the time of writing, i.e., on 18 April 2019, the stock of the company traded at a price of A$0.080, up by 1.266% during the day’s trade with the market capitalisation of ~A$56.11 Mn.
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