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(Sharecast News) - Aerospace and manufacturing composites supplier Velocity Composites said first-half sales were in line with management expectations in an update on Tuesday, rising to £5.9m from £4.4m year-on-year.
The AIM-traded firm said that it was, however, impacted by the sales mix due to the extended effects of the Covid-19 pandemic, and material supply chain pressures.
It invested £0.3m in the six months ended 1 May to support growth, international business development and research and development in its proprietary digital technology.
Velocity said that it was expected to deliver an adjusted EBITDA loss for the first half of £0.3m, narrowing from £0.5m a year earlier and coming in "slightly ahead" of management expectations.
"The company is seeing progress with international markets reopening as the pandemic subsides, which has improved the global recovery in aerospace manufacturing," the board said in its statement.
"As a result, the company is planning to resume expansion into North America and Europe.
"Furthermore, in the first half, there has been initial success in diversifying the focus of Velocity from civil aerospace into other sectors, including high-performance automotive manufacturing and defence."
The company said it was looking to develop those sectors further, with targeted resources and investment.
Velocity said its cost base had stabilised, as it successfully sustained investment in growth in the first half.
Underlying demand from aerospace manufacturing for its products and services was returning, with signs of further recovery in the full year, which was expected to be "more significant" in terms of sales in the 2021 financial year.
"Velocity's cash flow and liquidity are also in line with management expectations.
"The company continues to drive cash flow efficiencies through improved working capital management and is monitoring working capital closely ahead of the expected sales recovery and future growth."
As at 1 May, Velocity's cash at bank totalled £2m, down from £3.5m a year earlier, with anticipated key movements through underlying business performance of £0.3m, debt servicing of £0.5m, and working capital investment to support recovery of £0.6m.
Since the period ended, the firm's cash balance had improved to £2.4m on 20 May.
"The company has access to two invoice discounting facilities, including a key customer facility, both of which remain undrawn as at 1 May.
"At current sales levels, these facilities offer a combined drawdown capacity of £2.5m.
"The board and management look forward to the future with confidence in the long-term prospects of Velocity."
Velocity said it expected to announce its results for the six months ended 1 May on 29 June.
At 1224 BST, shares in Velocity Composites were up 2.2% at 19.42p.
Reporting by Josh White at Sharecast.com.