UK-based Carclo (LON: CAR) said on Wednesday that its technical plastics division has signed a framework agreement with a “major” global OEM for the manufacture of complex medical diagnostic disposable devices.
The agreement enables the award of production contracts to Carclo to manufacture a variety of products over the next ten years. Carclo said that it will make a significant capital investment to establish sufficient capacity for the anticipated demand in the current year.
Production contracts will remain subject to several conditions, such as product acceptance and, if they are met, they are set to be awarded in the first half of the year to 31 March fiscal 2022.
Carclo said it expects to reach full production volumes in the second half of fiscal 2022 and at a full-rate production the contracts are expected to deliver incremental annual revenues of £10 to £15 million for the contract duration.
“We are delighted to have secured this Framework Agreement and look forward to working with our customer over the next decade. This is a significant step forward in the development of CTP's strategy and is testament to our strengths in the medical diagnostic market,” commented Rob Stutzman, CEO of Carclo Technical Plastics.
The company’s shares rallied following the news, currently trading at 15.60p, up 23.08% having reached highs of 18.35p earlier in the day.