Carbon Revolution shares sink as coronavirus forces cuts, changes

Carbon Revolution shares veered lower as it warned of ‘difficult decisions’ because of falling demand for its prestige car parts.

Carbon Revolution CEO Jake Dingle. Picture: Alison Wynd

ASX newcomer Carbon Revolution’s shares sank 30 per cent after it revealed changes to its wheel-manufacturing operations, as the pandemic hits demand for auto parts.

The Geelong-based manufacturer of lightweight carbon-fibre wheels for prestige and sports cars told the sharemarket on Wednesday it had previously avoided significant disruption, but now workforce cuts loomed.

A spokesperson refused to provide any further detail on the extent of the job cuts, or operational shifts, when contacted by The Australian.

Carbon Revolution listed on the local bourse in November at $2.60 a share, boasting a market capitalisation of $331.1m before quickly increasing in value to more than $4 a share.

But in March its share price more than halved following a $25m capital raising and the withdrawal of guidance due to “increasing and short term uncertainty arising from the global impact of the COVID-19 outbreak”. A particular worry was supplying customers Ferrari in Italy and Ford in Detroit.

In February revenue was forecast to hit $62m by the end of the financial year, with approximately 23,000 units sold.

On Wednesday Carbon Revolution said “ongoing factors related to COVID-19” will extend reduced demand for their wheels in the short term and, necessitating workforce reductions and shift restructuring.

“Up until this point we have navigated through these challenging times without significant disruption to our business and team, however as a result of this recent news we must make difficult decisions to protect the interests of the company,” Carbon Revolution chief executive Jake Dingle said.

“I’m confident that this situation is temporary and we will be back on track as our customers return to normal operating conditions.

“We don’t foresee any long-term impact on the demand for our technology.”

Carbon Revolution did not respond to request for comment.

The company was added to the All Ordinaries after its rebalance in June and previously reported strong sales growth for the first half of the financial year, with revenue increasing by 243 per cent to more than $20m compared to the corresponding period.

Shares in Carbon Revolution closed down 29.5 per cent at $1.41 each.

The company will release full-year results in August.