(Alliance News) - Shares in Saietta Group PLC sank on Tuesday, as the company said it would be selling a redundant production line after missing out on a potentially lucrative manufacturing contract.
Saietta is an Towcester, England-based manufacturer of electric drivetrain systems for use in electric vehicles.
Shares in the company were down 57% at 6.89 pence each in London on Tuesday morning.
The company has received a proposal of GBP600,000 from an unnamed buyer for the purchase of a redundant production line at its Sunderland manufacturing site.
Saietta said that the sale is the result of the company being unable to reach a commercial agreement for a contract to product electrical steering pumps at the Sunderland plant.
While the contract was not for any of Saietta's products, the company said that the deal would have "contributed materially to group revenue over the medium term".
Saietta said that the rest of its manufacturing pipeline remains intact, with pilot production underway after receiving a purchase order for its AFT eDrive technology. Saietta has also received a purchase order for its radial flux technology, and expects to commence production in July.
Saietta has a sufficient cash balance to take it through to the end of its financial year on March 31, the company said. While it remains confident in its near-term financial future, Saietta added that "subsequent financial years will inevitably be impacted by today's update".
In November, Saietta forecast GBP2.7 million in revenue for the current financial year, alongside a loss before interest, tax, depreciation and amortisation of between GBP13.6 million and GBP14.0 million.
Chief Executive Officer David Woolley said: "Being unable to agree terms on a contract manufacturing opportunity is no reflection on the quality of the company's products. The sale of the redundant production line in our manufacturing hub in Sunderland makes sense for Saietta in comparison to a relatively low margin contract to manufacture a non-core product under license. This route allows Saietta to remain 100% focused on our strategic focus of providing proprietary eDrive solutions to manufacturers of lightweight electric vehicles."
By Hugh Cameron, Alliance News reporter
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