Profit warning marks swing into the red for Pressure Technologies

SPECIALIST engineering group Pressure Technologies has issued a profit warning this morning saying that project delays will have a “significant impact” on profitability in the coming year.

The company is expecting a swing into the red for the 2016 year, following dire predictions earlier this April.

The Sheffield-based business has now said that the “timing of contracts” in the alternate energy business with delays particularly in the USA would be materially affecting its results.

It said it had encountered “unanticipated additional legacy costs” as well as “margin erosion” at a project in North America.

The costs of research and development on top of these delays meant that will swing the division from a profit to a loss that will impact the group result.

It said that revenues would be transferred into the 2017 year.

The company stated that further job cuts had been made in its engineered products division, and that it was disposing of its Houston sales and maintenance office to a third-party, though the “full benefits” of these moves has not yet been realised.

Its cylinder, precision machined components and engineered products divisions continue to trade in line with expectations, despite the “ongoing challenges” of the oil and gas market.

The company said that since its interims in June, the alternative energy division secured £8.5m of contracts with a conditional contract award of £6.5m on top of the £10m contract from the first half of the year.

A statement from the directors said: “We have continued to focus on productivity and cost reduction whilst maintaining our core skills.

“Looking to the 2017 financial year, trading conditions in the oil and gas market continue to be challenging and while the market is balancing, the outlook for recovery is slow. We therefore anticipate that trading in our manufacturing divisions will remain around its current level throughout the next financial year.

“The board remains confident in the medium to long-term prospects for the group and believes that when the oil and gas market returns it will present considerable opportunities. In the meantime, we will take whatever measures are necessary to ensure the resilience of our businesses whilst continuing to invest in the future of the group and implement the strategic objectives to broaden our customer, technology and industrial base.”

 

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