Engineering group endures another difficult year
Specialist engineering group, Pressure Technologies has reported a reduction in its pre-tax loss in its preliminary results for 2021, as the CEO says the business has endured “another year of difficult trading” in some sectors.
The Sheffield-based business which operates across two divisions – Chesterfield Special Cylinders (CSC) and Precision Machined Components (PMC) – designs and manufactures high pressure systems used in the global energy, defence and industrial gas markets.
The results for the year ending 2 October 2021 show that loss before tax dropped by almost 80% to £4.2m, but still remained higher than the pre-pandemic levels of 2019 when it reported a loss of half a million pounds.
The improve financial position comes despite the business reporting a minor drop in revenue, with the company’s chairman Sir Roy Gardner, who is stepping down ahead of the AGM in March, noting that there had been a number of anticipated contracts delayed “as a result of the significant economic and operational headwinds that have slowed global activity”.
The company’s chief executive Chris Walters added that Pressure Technologies had “continued to make good progress and delivered results in line with market expectations, despite the prolonged challenges of oil and gas market conditions and the disruptive back drop of Covid-19.”
The business started 2021 with what Gardner calls a “significant” £7.5m fundraise, which supported growth opportunities at CSC particularly within the hydrogen market.
The business also noted that it performed well within the defence market with contract revenues more than doubling from the sector within CSC to £11.1m, with the growth driven by both domestic and overseas naval submarine and surface ship programmes.
Growth occurred within PMC too as its non-oil and gas revenue rose to £0.7m as the business continued to diversify its markets.
Walters said: “A strong performance in Chesterfield Special Cylinders (CSC) from major defence, nuclear and hydrogen energy contracts, which offset the impact of difficult trading conditions for Precision Machined Components (PMC) in the oil and gas market, supply chain disruptions and the continuing backdrop of Covid-19 related challenges.”
PMC also saw a 40% reduction in its cost base following a restructuring in February, which has helped deliver the improved loss before tax alongside the 69% revenue growth at CSC.
Walters said: “For PMC, our focus remains on the recovery of profitability and cash generation. We are encouraged by recent increases in order intake [but] remain cautious regarding the pace of recovery, particularly in light of the Covid-19 Omicron variant, the division is well placed to deliver an improved performance in FY22.””
Looking ahead the chief executive expects the the investment within CSC Sheffield to continue “throughout 2022” in order to increase operational capacity and meet the “expected growth in demand for static and mobile hydrogen storage projects from 2023”.
He concluded: “Whilst we have had to endure another year of difficult trading in the PMC division as a result of the Covid-19 pandemic and depressed oil and gas market conditions, the Board is pleased with the overall progress being made by the Group.
Away from the growth within the defence sector which will see high value projects weighted to the second half of the financial year, Walters also highlighted the opportunities provided by the net zero agenda for hydrogen market.
“As governments increasingly acknowledge the role of hydrogen in net zero carbon targets for transportation and industrial decarbonisation, hydrogen energy storage remains a strategically important market for the Group. Hydrogen related revenue was strong in FY21 and the pipeline of opportunities with established and new customers continues to grow.”