RELEASE THE PRESSURE
Engineering firm’s shake-up reaps rewards as it puts focus on defence
SHARES IN engineering firm Pressure Technologies jumped 10 per cent after the group said its manufacturing divisions are showing encouraging progress after a reorganisation following the oil and gas market downturn.
The Sheffield-based group has been through a torrid time following the collapse in the oil and gas market, but its cylinders business (which supplies highpressure cylinder systems) has switched its focus away from oil and gas to the defence market.
Pressure Tech’s CEO John Hayward said the defence market is now the mainstay of the cylinders business with a firm order book of £11.2m through to 2020.
Further orders are expected for the Dreadnought class submarine build programme, which is Trident’s replacement.
“We are supplying the Dreadnought programme with a range of cylinders,” said Mr Hayward.
“There are standard submarine cylinders and banana cylinders, which are very specialised and more efficient. We are not allowed to say exactly what they’re used for.”
The first-half result was hit by the phasing of the delivery of large defence orders, pushing both revenue and profit into the second half.
Meanwhile, demand for cylinders in the oil and gas market remains subdued, but the firm is getting small orders.
“There is no expectation of an increase in drill-ship or semisubmersible rigs in the near future,” said Mr Hayward.
Pressure Tech is seen as a safe pair of hands at a time when rivals are going bust.
“We are recognised as being financially stable when a number of our rivals have gone bust,” said Mr Hayward. “We press all the right buttons in de-risking the supply chain.”
The group said it had not seen any impact from the General Election and it should not be affected by the Brexit negotiations.
“For us, Brexit is not an issue,” said Mr Hayward.
“In terms of Europe, the only work that has the potential to be affected is defence, but we are a monopoly supplier. I’m not overly concerned about Brexit.”
The group said redundancy costs had an impact after the firm made 12 employees redundant. It is not planning any more job losses. The company made a pre-tax loss of £2.6m in the six months to April 1, down from a profit of £900,000 the previous half year.
Much of this was due to the recognition of a payment in the 2016 accounts and a £400,000 hit from the redundancies.
The group said that its restructured Alternative Energy Division has a solid platform on which to grow.
“Whilst timing of orders continues to be a source of frustration there are clear signs, particularly in North America, that significant market growth can be expected over the remainder of the decade,” said Mr Hayward.
The division supplies equipment used to upgrade biogas produced by the anaerobic digestion of organic waste to high-quality methane, which is injected into the gas grid or used as vehicle fuel.
The group said that order placement has been “frustratingly slow” due to external factors.
In the UK, a proposed change to Renewable Heat Incentive which favoured biogas upgrading, was initially delayed by a drafting error in the legislation and was further delayed by the General Election.
We press all the right buttons in de-risking the supply chain. John Hayward, chief executive of Pressure Technologies