Quickstep profit performance to continue – Chairman

Composites manufacturer Quickstep’s Chairman Patrick Largier has left the way open for the company to come to terms with the local conglomerate of defence SMEs, ASDAM Group, which is bidding to take over the company.

Largier told the company’s AGM that the company’s board and its advisers were studying the offer.

Largier said: “Quickstep’s board and our advisers need to determine whether on balance this offer, or any future offer from CPE or any other interested party, provides our shareholders a better risk weighted return compared to Quickstep remaining an independent ASX listed corporation.

“Once the board has completed its work and made its determination, we will provide advice to shareholders on our recommendations with respect to this matter.”

However Largier mounted a strong case for the value of the improvements made to the Sydney-based manufacturer over the past six months which had seen the company moving to be EBITDA positive on the basis of ongoing operations.

“This strategy has been focussed initially on optimising the existing strong core Structures business and exiting the loss-making MRO business.

“Once this is achieved and the company’s financial position is sufficiently healthy, we will review our growth strategy and determine any new initiatives to achieve future growth.

“It should however be noted that we are currently heavily involved in several Australian focussed growth initiatives, not least of which is the Australian Defence Guided Weapons Explosive Ordnance (GWEO) initiative and that this work is continuing apace.”

During the period the company redesigned its production processes to accommodate lower demand for aerospace structures, while at the same time enhancing profitability and cashflow.

“This initiative has proven to be very successful as can be seen by our recently released first quarter results where revenue from continuing operations (which excludes the Victorian MRO business) was down by 14 percent compared to the same quarter in FY24.

“Despite this drop in revenue, EBITDA for these continuing businesses was up by 78 percent (on PCP FY24).”

The company also negotiated price increases with some of its customers which will progressively take effect over the next six months.

“As a result of these changes in our core structures business we expect this strong profit performance to continue over the 2025 financial year.

“While we expect that Q2 FY25 will be weaker than the first quarter (due to a slow scheduled delivery month in November and the seasonal Christmas effect in December) we then expect that profitability will accelerate appreciably in the second half of the year as our new operating systems settles down and the price increases take effect.”

The effect of the company exiting its MRO (maintenance, repair and overhaul) business based at Tullamarine in Victoria is nearing its end, with most of the losses incurred by the business ending in October.

Largier thanked fellow directors and Demi Stefanova who stepped into the role of interim CEO with the departure of long serving CEO Mark Burgess.

However, tellingly, he made no mention of Burgess who left the company with the business improvements well underway, and who is associated with the early success of Quickstep.

Further reading:
Quickstep shares double on takeover bid
Mark Burgess to leave Quickstep, Demi Stefanova is interim CEO

Picture: Patrick Largier