Listed engineering group forecasts losses, despite latest contract win
Sheffield-based specialist engineering group Pressure Technologies expects to make a loss, despite a significant contract win worth more than £3m.
The Group’s Chesterfield Special Cylinders division (CSC) has won a deal to supply nitrogen storage solutions to EDF Energy for several UK nuclear power plants.
But even though proactive steps were taken in Pressure Technologies’ Precision Machined Components (PMC) division earlier in the year, including the closure of its loss-making Quadscot operation, divisional restructuring and cost savings, the Group expects an operating loss for the division in FY20.
In a trading update today, the business explains: “When combined with a lower profit anticipated in CSC, principally reflecting the expected milestone delay in the BAE Systems contract, a loss-making performance at Group level is expected for the current financial year.”
Outlining the contract win with EDF, it notes this comprises ultra-large high-pressure cylinders manufactured at CSC’s Sheffield facility, in a series of nitrogen storage packages for delivery through mid-FY21.
The newest deal builds on a strong relationship established with EDF Energy following the first contract, announced in October 2019.
In June 2020, CSC secured an order from long standing customer BAE Systems for the supply of cylinders to the UK MOD’s Dreadnought class submarine programme, covering the long lead time raw material milestone for the second boat in the series.
However, delayed order placement and a compressed delivery schedule are expected to result in the late receipt of material and the deferral of revenue and profit driven by this milestone from the fourth quarter of FY20 into the first quarter of FY21.
The company’s update adds: “These major contracts with EDF Energy and BAE Systems reinforce the strong outlook for the Group’s CSC division.
“They demonstrate further progress with the Group’s strategy to diversify the business into new markets, reducing a historical dependence on the oil & gas sector where the challenging trading conditions and slower than expected turnaround, compounded by the current pandemic, continue to adversely impact the performance of its Precision Machined Components division.”