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Advanced material kit supplier to the aerospace sector Velocity Composites warned it would post an full-year loss, as the pandemic stymies the production of new commercial aircraft.
Adjusted earnings before interest, tax, depreciation and amortisation for the year through October were expected to come in at a loss of around £1.8 million, compared to a £0.6 million profit year-on-year.
Revenue was seen dropping to £13.6 million, down from £24.2 million.
Velocity Composites said it had reduced its headcount by around 40% and restructured remaining management and staff, while senior executives and directors had agreed a 20% deferment of cash base salaries.
'Current activity levels are challenging, and the first half of 2021 has begun and is expected to continue with revenues similar to those in the second half of 2020 assuming additional lockdowns and short-term customer shutdowns through the winter months,' it said.
'The company has, however, in place a robust level of liquidity and funding to support the company during this disruptive period and the board is cautiously optimistic as to the prospects for future growth.'
Velocity Composites said its corporate bankers had agreed to extend the repayment schedule of its Coronavirus Business Interruption Loan of £2.0 million from over two years to six years, starting in July 2021 and ending July 2026.
The company said it also retained an Invoice Discounting Facility, which could fund up to £5.0 million of receivables.
An inventory reduction programme was expected to yield a further £0.5 million of cash by mid-2021.
'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,' chief executive Jon Bridges said.
'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.'
At 9:48am: (LON:VEL) Velocity Composites Plc share price was 0p at 16.5p