Losses widen and revenues drop at Pressure Technologies in ‘transitional’ year

The new CEO at Sheffield-headquartered listed engineering group Pressure Technologies has said that the firm’s annual results show a ‘transitional year’ in which the group dealt with the continuation of the downturn in the oil and gas market and focusing on diversifying its operations. 

The firm this morning reported its annual results ended 29 September, which showed that group revenue reduced by 7% to £32.2m from £34.6m in 2017 and pre-tax losses widened to £3.1m from £1.4m in the previous year. 

The revenue loss was mostly as a result of lower turnover in its Alternative Energy division, which, as reported yesterday, it is disposing of for £11.1m. Turnover from its manufacturing divisions was up by 13%.  

Speaking to TheBusinessDesk.com this morning, CEO Chris Walters, who has been in position for three months, said: “It has been a transitional year for the business.” Walters added that the firm had gone from an extremely good position in the oil and gas markets to then being “hit by a the oil and gas downturn.”

 “The focus of the senior management team has been the effective re-structure to weather the storm of the oil and gas downturn in difficult circumstances. 

“But this is a very resilient organisation and now we are seeing a trend of an improving order book. We have been operating in a very difficult market but have strong loyalty from the team and customers. The level of re-structure can be unsettling.” 

Within the year, the firm’s manufacturing divisions achieved returns on sales of between 11% and 13%, which it described as “commendable in what were tough trading conditions in oil and gas”.  The AE Division recorded a small overall operating loss in the year, primarily due to low order intake in the first-half, but it was profitable throughout the second-half following its restructure.

Manufacturing revenue was up 13% year on year with second-half 32% up on the first-half as the businesses experience an uplift in activity from core markets. Its Precision Machined Components Division’s closing order book up 54% on 2017, with highest intake levels in October 2018, since April 2014

In June, Pressure Technologies completed sale of Hydratron, the Group’s Engineered Products Division – Greenlane – for £1.1m and post year-end is the conditional sale of the Alternative Energy Division for £11.1 million to Canadian TSX Venture Exchange  listed company, Creation Capital. 

The firm’s closing net debt stood at £6.7m, down from £11.1m in 2017.

Walters said the firm would continue to focus on diversifying the business in terms of its customer base and geography – as well as extending its range of services. A particular focus will be on the defence contracts, which he said would bring new business from the UK and overseas. Speaking of the year ahead, he said: “Customers are cautiously optimistic about 2019. It will continue to be a transitional year for us. 2020 will be when major capital investment comes back on track.

“In 2019, customers will be looking to recover from the uncertainty and catch up with orders.”

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