Quickstep Hits The Mach

This story features QUICKSTEP HOLDINGS LIMITED. For more info SHARE ANALYSIS: QHL

By Greg Peel

Quickstep Holdings ((QHL)) is a Perth-based manufacturer of “composite” materials such as fibreglass, Kevlar and carbon fibre-reinforced plastics which are rapidly replacing aluminium in the race to reduce the weight of vehicles and aircraft in the new carbon-wary age. As an example, Boeing’s new 787 Dreamliner is constructed using only 20% aluminium, with composites making up the bulk of the balance.

FNArena noted in July’s Quickstep Has The Right Stuff that the US Congress had voted to discontinue purchases of Lockheed Martin’s costly F-22 stealth fighter and instead commission up to 3000 of the company’s newer but more conventional F-35 joint strike fighter. The Australian government had also stuck up its hand for 100 of the new planes. Lockheed Martin’s problem, however, was difficulty in securing contractors to satisfy construction of all the high-tech composite parts for the F-35. To that end, Lockheed headed downunder to a land in which a love of sailing had encouraged world-beating development in composite manufacturing techniques.

To cut a long story short, not only has Quickstep developed its own leading-edge composite technology but it was realistically the only one of three certified aircraft part suppliers in the country with the capacity to satisfy Lockheed’s demands. The only thing standing in the way of an extensive deal with Lockheed, it appeared, was a need for Australian government funding support.

Yesterday Quickstep went into a trading halt ahead of today’s announcement that the company has indeed sealed a deal with Lockheed, in the form of a Memorandum of Understanding (MOU) from both Lockheed and aerospace partner Northrop Grumman for Quickstep to build components for the F-35. The MOU is for “in excess of $700m” of potential contracts over 20 years.

The MOU is a precursor to an ultimate Long Term Agreement (LTA) which the three parties are now negotiating, and which Quickstep hopes will be finalised by March. The deal would create a minimum 156 high-end technical jobs with a possible further 620 support industry jobs. It is thus no surprise the announcement reports “The Australian Federal Government… has been highly instrumental in generating this opportunity for Australian industry”.

Quickstep managing director Philippe Odouard suggested, “The potential value of the LTA to Quickstep and Australia cannot be overstated”.

Quickstep shares will resume trading today.

Read the full announcement here.

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