Hardide narrows losses, flags plans to raise further funds

Surface coating specialist Hardide reported a 10% improvement in revenue in its preliminary results on Thursday, to a record £5.5m, driven by robust demand in the oil and gas sector, expanded aerospace work in the fourth quarter, and successful cost inflation recovery through selling prices.

Its shares were sliding, however, as it revealed its plans to raise further equity to address short-term cash flow challenges.

The AIM-traded firm said gross margins expanded by 10 percentage points to 47.5%, attributed to enhanced capacity use and operational gearing.

It recorded an EBITDA loss of £0.1m, marking an improvement of £0.8m from the prior year, and a loss before tax of £1.2m, up by £1.1m.

The company said it achieved a positive business cash flow before financing of £0.1m, representing a significant increase of £1.3m, with a steady cash balance of £0.7m as of 30 September.

Looking at 2024, Hardide said it anticipated revenue to remain steady, with a focus on mitigating costs and achieving EBITDA positivity as trading momentum picked up.

The company said it had appointed Steve Paul, formerly of Praxair Surface Technologies, as its new interim chief executive officer, effective 12 February, to steer it through its next phase of growth.

Despite a slower start to the year due to original equipment manufacturer (OEM) customer destocking, Hardide said it was optimistic about its prospects with plans to secure additional equity and debt funding to address short-term cash constraints and support its growth strategy by early March.

“We are pleased with the progress made in 2023, particularly the significant improvements to the EBITDA and cash flow performance of the business,” said non-executive chair Andrew Magson.

“This was driven by further growth, effective management of input cost inflation, and strong management of costs and working capital.

“Trading conditions so far in the current financial year have been unexpectedly challenging and we have taken all reasonable internal measures to mitigate the impact without damaging the core of our business.”

Magson said that, having managed the business to cash breakeven in 2023, the company regretted now being in the position of asking investors for support.

“The funding we are seeking will enable us to execute our strategy of accelerating revenue growth, bolstered and underpinned by the appointment of Steve Paul as interim chief executive officer today, and to unlock the significant value potential provided by our unique coatings technology.”

At 1125 GMT, shares in Hardide were down 33.33% at 6.5p.

Reporting by Josh White for Sharecast.com.