Strip Tinning tumbles as customer terminates contract

Specialist automotive connector supplier Strip Tinning announced on Friday that its wholly-owned subsidiary STL has received notice to terminate its contract with a Croatian electric vehicle technology firm for the supply of cell management systems to a leading German manufacturer, from 1 October.

The AIM-traded company said the contract was signed in December last year, following an extended period of design and development work with the customer.

It said the supply agreement, for a term of five years, was worth €2m per year to STL at peak volumes, with production ramp-up starting in the second half of 2023.

“Whilst the loss of the contract would have no material impact on market expectations for the current financial year, the customer had recently indicated that volumes were likely to be increased by 33% over the life of the project and STL had adjusted plans with capital equipment suppliers to accommodate this,” the board said in its statement.

It said STL was in dialogue with the customer to better understand the rationale and legal basis of their decision, as all STL milestone deliverables under the contract had been met so far, including the incorporation of “substantial” engineering changes at the request of the customer, which were subject to re-pricing negotiations to ensure the contract remained profitable.

“STL preference would be to continue working with the customer and is in early discussions about the possibility of working together in the future whilst fully reserving its legal position.

“Based on continued demand for its EV cell management system technology, Strip Tinning will continue to invest in scaling up its production capability for this product line to meet firm customer orders.”

The board said it would make a further update “in due course”.

At 0936 BST, shares in Strip Tinning Holdings were down 26.28% at 71.88p.

Reporting by Josh White at Sharecast.com.