GAS cylinder firm Pressure Technologies issued its second profits warning of the year as changes in its sales mix and higher costs dented margins.
“While turnover is expected to be in line with market forecasts, the group will deliver profits substantially below expectations for the year ending 1 October 2011,” warned the Sheffield company.
“The balance sheet, however, remains strong and the group maintains tight discipline on the management of cash flow with year end net funds in line with expectations.”
Shares in the company were down about 14 per cent at 116p this morning. In April the company also warned over 2011 profits, as delays in the offshore oil and gas market hit trading.
Pressure insisted it plans to maintain its final dividend after ending its financial year with net funds of about £2.9m.
The company said a forecast upturn in Chesterfield Special Cylinders’ main market, supplying high-pressure vessel systems for deep water oil rigs and drillships, “appears to be underway”.
It has so far secured orders to supply six drillships in 2012, compared with three for the whole of its 2011 financial year.
“The pipeline of live quotations remains strong,” added the company, which expects this market to recover in the second half of its 2012 year.
However, Pressure added competition has increased, which has squeezed margins. “In response to the changing marketplace, projects are underway to enhance gross margins and reduce fixed costs,” it said.
Pressure said it has revised down its expectations for growth at Al-Met, part of its engineered products division. “Significant growth for wear parts into the subsea market will not now take place until 2013 and we anticipate double digit growth in 2013 and 2014,” it said.
The company added growth at its Chesterfield BioGas arm, which cleans waste methane for injection into the grid, has been slower than expected, also forcing the group to lower its expectations to this division for 2012.
“Growth in 2012 will come principally from the engineered products division,” said the company. “CSC is expected to show growth in the second half of 2012 into 2013. Major growth in the biogas business is now expected in 2013 rather than 2012.”