Oil slump impacts Stoke industrial services group Northbridge
STOKE-on-Trent industrial services and rental company, Northbridge, has said full year performance is likely to be in line with expectations but has warned it is too early to predict whether its major markets will recover in 2016.
The company is massively exposed to the oil & gas sector and consequently has been severely impacted by the decline in the demand for oil.
In a pre-close trading statement in advance of its preliminary results announcement, the company said: “The slowdown in the oil & gas industry has had a substantial impact on all of Northbridge’s businesses serving that market, where there has been an estimated $400bn cut in capital expenditure since July 2014.
“The current surplus of oil supply compared with demand, which is caused by an increase in global production and an economic slowdown in the oil importing countries, has negated the immediate need for much further exploration and production drilling. This in turn has led to a decline in the world wide active rig count.
“The marine fabrication yards working in the offshore energy area have also experienced a slowdown in new orders and conversions together with delays, postponements and cancellation of existing orders.”
Against this backdrop, it said its rental activities relating to the energy sector continued to suffer, and this was affecting both oil tools and loadbanks.
In contrast, the loadbanks and transformers operating out of Europe have had a good year, where the lower cost of fuel oil has increased investment in load testing generators, and transformer rental contracts have been extended leading to a record level of activity for the group.
“The group expects the result for 2015 to be substantially in line with management’s expectations but it is too early to predict when any recovery may come to our markets in 2016,” it said.
