Revenues fall amidst difficult trading conditions for engineering group
Sheffield-based specialist engineering group, Pressure Technologies, has reported a pre-tax loss of £20m in its preliminary results for the 53 weeks to 3 October 2020.
It compares with a £0.5m operating loss in 2019 and includes a £13.9m non-cash exceptional impairment.
The listed business, which has highlighted tough trading conditions, Covid-19 related disruption and the deferral of a major defence contract from quarter four FY20 into quarter one FY21, also saw its revenues drop from £28.3m in 2019 to £25.4m.
Pressure Technologies operates across two divisions – Chesterfield Special Cylinders (CSC) and Precision Machined Components (PMC).
It says The phasing of major defence contracts in CSC and the deferral of revenue and profit of a major contract from late in the year into FY21, overshadowed what was otherwise a good performance for this part of the business.
Meanwhile, PMC delivered revenue of £14.2m (2019: £14.4m), but reported an operating loss of £0.7m (2019: £1.9m operating profit) driven by lower than expected gross margins and higher indirect overhead and depreciation costs resulting from the growth investment made since 2019.
Poor operational performance by this division in the first half of the year failed to improve in the pandemic-impacted second half.
This was compounded by a depressed oil price, which resulted in continued disruption and uncertainty for customers and the deferral of project spend, significantly impacting order intake.
Chris Walters, chief executive of Pressure Technologies, responded: “We anticipate at least a further year of similarly challenging conditions in the oil and gas market.
“But the consolidation of sites, operational improvements, diversification of the customer base and new long-term strategic supply agreements position our Precision Machined Components division well for a return to profitability when market conditions recover.
“Whilst we remain cautious regarding oil and gas market conditions, the increasing momentum in hydrogen and the strong orderbook for defence and nuclear customers underpin the Board’s confidence in the outlook for 2021 and beyond.”