Hardide plc (LON:HDD) Chief Executive Officer Philip Kirkham caught up with DirectorsTalk for an exclusive interview to discuss half-year results, their new UK premises, encouraging progress with aerospace and power generation customers, the transition to alternative energy and the longer term outlook for the group.
Q1: Interims published today for Hardide, it’s been a half-year that has seen effects of the pandemic in some of your key sectors like energy and aerospace. Phil, how would you characterise the half-year?
A1: Well, it’s been very challenging and frustrating but we’ve made some really good progress on some exciting new fast-track applications, which I can go into a bit more detail about shortly.
If you look at the first half of the last financial year, we were on a very steep upward trajectory, before the pandemic affected our customers’ demand, and obviously it especially affected the oil and gas sector. This sector and other sectors are now showing quite good signs of recovery, the higher oil price and the rising rig count should see demanding increasing again throughout the second half. It’s interesting that there was a very encouraging statement recently from the CEO of one of the major oil service companies, Schlumberger, that said that they were expecting demand to pick up significantly in the second half of 2021 and onwards into 2022.
If you look at the aerospace sector, civil aircraft bill rates have obviously been cut back substantially and maintenance and overhaul reduced as aircraft have been flying fewer hours. As yet we’ve not really started to supply Airbus in any significant way so that’s not affecting our revenues but it has pushed back the starting date of our supplying into them to later this year.
However, interestingly, we’ve also seen a fivefold increasing in demand for the canopy locking components that we coat for the Typhoon Eurofighter compared to the same period last year so that’s been very encouraging and very positive.
Q2: Is your move to new and expanded UK premises now complete?
A2: Yes, it is, the move really sort of completed in the middle of autumn last year. The move went very smoothly, all the processes have been running since with no problems, we’ve been doing a lot of qualification with Airbus on the new site to get this approved production. The final part of that is an audit that is due to take place later in June and, following that, we should be fully qualified to process Airbus parts of the new site.
The last coating reactor that we had to leave at the old Wedgewood Road site, for Airbus components, that comes out at the end of June and will be transferred over to the Longlands Road site.
We can get on with the final site clearance with the lease at Wedgewood Road ending in October this year.
Q3: Now, as you mentioned, you reported encouraging progress with aerospace and power generation customers. Can you tell us more about that?
A3: We’re very close to signing a long-term agreement with a large German tier-one supplier to Airbus for various A330 A320 20 components and they’re just waiting for some last minute details from Airbus to put into the agreement. We’re also getting close to production orders from other tier-one suppliers for new components for Airbus as well.
In the power generation side of things, we’ve had a long development process with EDF, on the steam turbine blades, which is coming to a conclusion. We’ve a much quicker development that’s happened more recently with a major European manufacturer of industrial gas turbines, where they’ve now written a technical specification for our coatings and we are now rapidly moving into a qualification and validation phase. First orders expected for coated blades later in 2021 and more expected in 2022.
Q4: The group is embracing the transition to alternative energy with a strategy to build its position in this area. How is that progressing now?
A4: We’re very conscious of the long-term global moves to reduce dependency on fossil fuels and we’ve developed a strategy to really look at new applications in the alternative energy sectors.
Now, one very interesting application we’re currently involved with is a coating of components used in the manufacturer of electric vehicle batteries and here we’re working with a major US electric vehicle manufacturer.
Another alternative energy sector is solar energy which we have been in for some time, we’re supplying coated components using the production process of the materials that go into solar cells. As you would expect, this demand is growing, the customers are growing and rapidly expanding their production facilities. So, we will see more business from that area as their demand grows.
We’re also looking at other potential opportunities in areas such as geothermal energy, energy from biomass, and also nuclear fusion and we’ve got a number of interesting leads in these areas at the moment.
Q5: Phil, how do you view the next year and the longer term outlook for Hardide?
A5: With excitement really, it’s an exciting time, we’ve lots of very positive developments underway with Airbus and other outer space companies and add to that, the electric vehicle battery opportunities, and the industrial gas turbine opportunities. These are potentially huge numbers for us.
During the pandemic, we didn’t lose any customers at all, there are good signs of recovery happening in our traditional markets, and we very much look forward to an improved second half and a very positive 2022.