Hardide plc (LON: HDD) Chief Executive Officer Philip Kirkham caught up with DirectorsTalk to discuss the financial highlights from their annual results, how he sees the energy sector progressing and what investors can look out for from the company in 2023.
Q1: Annual results for the year ended 30th September have not been published, can you summarise for us and give us some of the financial highlights?
A1: Our sales revenue was up by 39% this year, compared to the previous year, and back to the levels we experienced pre-pandemic. We saw a good improvement in our financial performance in the year with increases in both gross margin and gross profit, and the balance sheet was strengthened with a £500,000 equity raise in September. Also, we got another £500,000 cash from a deal post-period which was do with the property in the US. So, we experienced strong sales growth across all of our market sectors.
All in all it was a very positive year, and this now enables us to build on this foundation and grow the revenues further as the markets continue their recovery and we convert the new business opportunities that we’re currently working on.
Q2: Energy is Hardide Coatings’ largest customer market and that accounts for about 57% of revenue, now this includes oil and gas as well as power generation. How do you see these sectors developing for the group?
A2: Well, energy has always been our largest market sector, primarily due to oil and gas where our coating had its first applications many years ago, solved many problems for our customers and has got a great reputation. More recently, we’ve been starting a similar journey in the power generation market with great success on improving the operating performance of industrial gas turbine blades.
The oil and gas market is really taking off now as you can see from recent announcements from the likes of Schlumberger, Halliburton and Baker Hughes, where they all say they are seeing “the start of a multi-year upturn in global oil and gas activity” and “years of growth”. So, it’s looking very positive in the oil and gas sector for many years to come.
The industrial gas turbine market has great potential for us, and this is where we are coating turbine blades to improve their erosion resistance and make them last longer in service.
We’ve successfully coated two major high value orders for Ansaldo Energia in Italy in the last year, and expect further order from them in2023. We’re also in tests and trials with a number of other turbine manufacturers and we expect this business sector to grow significantly in the short to medium term.
The aerospace sector has also started to develop for us this year with regular production orders for the coating of wing components for the high volume single aisle A320 series of Airbus aircraft, as well as the wider bodies A330, A380 & the military aircraft A400M. So, we’re also currently testing for further components on the A320 which would be very high volume work for us.
Another very interesting area we’re working on is hydrogen production and storage where we believe our coating will provide an excellent barrier to hydrogen and stopping hydrogen getting into the metal. We’ve currently got some tests underway at a laboratory to give us actual data to prove this and then we can market that because hydrogen getting into metals causes the metals to crack. So, if our coating can stop the hydrogen getting through to the metal then it’s obviously a major benefit and has got great applications.
In addition to that, we’ve got a project underway currently at Cranfield University, sponsored by the Henry Royce Institute, looking at using our coating in the production of green hydrogen, which again could open up a brand new avenue for us.
Q3: What can investors expect and what should they be looking out for from Hardide ion 2023?
A3: We’re actively progressing some new and very high volume sales opportunities which could increase our turnover further, and underpin our determined drive towards profitability.
As well as driving sales, we’ve implemented a number of initiatives to improve our working capital and reduce our cost base by about £300,000-$400,000 over the first half of this calendar year. These initiatives are on track to deliver this.
So, we’re looking for a greatly improved performance in 2023 but ;lastly, I’d just like to register the company’s thanks and gratitude to Robert Goddard who left the company a few weeks ago and has been replaced as Chair by Andrew Magson. Robert had been our Chairman for 15 years and guided the company through some very difficult times in the early days, and we wish him well for the future.
