Having been unheard of until the last few years, now Unmanned Aerial Vehicles (UAV) have skyrocketed in demand and popularity, mainly because it can stay aloft for many hours without having to rely on a human pilot to fly it. Widely used in diverse sectors from agriculture and law enforcement to healthcare and search and rescue, the global UAV Market Size is expected to register a robust revenue CAGR of 13.57% by 2028.
As a critical supplier of materials to UAV manufacturers, Quickstep (ASX: QHL) are also able to rake in some serious cash thanks to the trend. Quickstep is the largest independent aerospace composite business in Australia with facilities in Sydney, Geelong, Melbourne and Dallas, and it recently has signed a new contract with UAV solutions provider company Carbonix to supply composite aerostructures for Carbonix’s latest long-range drone.
The contract is valued at $2.3 million and includes engineering, tooling and production of an initial 40 drone aerostructures commencing in May 2023 to June 2024. All work will be conducted at the Company’s Geelong facility.
Commenting on the new contract, Quickstep CEO Mark Burgess said, “We continue to secure substantial new orders in this exciting market segment. Our engineering-led solutions have great traction with drone companies and we are delighted to be supporting Carbonix as they increase their market penetration in Australia and the USA. We anticipate the demand for this aircraft will substantially exceed the initial production volume.”
The Company incurred a 235% decrease in net profit to a net loss of $4.4m in the December half of FY23, after previously generating $3.2m net profit in the previous corresponding period (pcp). Revenue was also down 4% to $45.4m from $47.3m on pcp, while EBITDA was down 191% to ($3.6m) from $3.9m on pcp. The decrease in net profit is due to lower production output, employee restructuring costs and Aftermarket Goodwill impairment.
Quickstep admitted that the H1 FY23 Group performance was impacted by ongoing operational challenges disclosed in late H2 FY22, in which the industry experiences supply chain disruption, skilled labour shortages in the wake of the pandemic, and specific key equipment reliability issues (Aerostructures impact). Aftermarket continues to face a customer and operating environment still in recovery from the pandemic. Volumes, both contracted and ad hoc, were substantially behind plan during H1 FY23.
As a solution, the Board of Quickstep has initiated a strategic review of the Aftermarket business as well as a broad cost management and operational recovery effort driven by the H1 FY23 loss. Involving all parts of the company, these initiatives are expected to yield positive results during H2 FY23 and demonstrate a marked financial improvement half over half.
Clara is a Business Reporter for The Sentiment.
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