Hydraulics group hopeful of rebound in activity levels following grim 2020
Revenues declined and profit became loss for Skelmersdale-based hydraulics group Flowtech Fluidpower in its year to December 31, 2020.
But it said first quarter trading was “encouraging” with revenue and margin slightly above expectations, and it anticipates a potential recovery to 2019 activity levels by the end of 2021.
Turnover for the year dropped from £112.418m the previous year to £95.081m, due to the impact of COVID-19, while a pre-tax profit of £4.707m in 2019 became a £2.148m pre-tax loss in 2020.
The company said it is looking to reintroduce a final dividend in respect of its results for 2021 and thereafter adopt a balanced approach to dividend policy.
It also generated £10.1m net cash from operating activities driven by the effective management of working capital, and saw its net debt reduce by £5m to £11.6m.
Chief executive, Bryce Brooks, said: “Our financial performance has been considerably impacted with the significant reduction in revenue in the middle and latter part of the year having a resultant effect on profitability.
“It is some comfort that data we obtain from the British Fluid Power Association suggests we have achieved a modest increase in market share in 2020, but it has overall been a year of ensuring a pragmatic approach to customer service and supply chain management.
“However, it is particularly satisfying that with pre-tax cash flow from operating activities of £10.7m during the year (2019: £16.3m) mostly derived from our management of working capital, we have been able to ensure that our balance sheet has been well protected.”
Looking forward, he said: “We have been encouraged by our performance over the past quarter, with both revenue and margins trending slightly above our expectations.
“The combination of Brexit and COVID-19, and in particular the current challenged nature of global supply chains, continue to make underlying trading difficult to interpret.
“What is clear is there has been a continued upward trend in our ‘resellers’ business, and evidence of restocking in our OEM (original equipment manufacturer) customers.
“We believe if current patterns continue, we could exit 2021 with a run rate revenue at a similar level to 2019.
“We are also seeing the benefit of the actions we took to reduce operational costs being reflected in our margins, which has provided support for the significant investment in our online platforms which we expect to begin to provide a meaningful contribution in 2022 and beyond.”
