Firm feels Pressure but fires on all cylinders

GAS cylinder firm Pressure Technologies reported a slump in annual profits, but said the trough in demand for deepwater oil and gas platforms has passed.

Pressure said it is making good progress with transforming the business, and there are more acquisitions to come.

The group’s shares closed up nearly three per cent, a rise of 3p to 118p, following the upbeat statement.

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Pre-tax profits at the Sheffield-based company fell to £600,000 in the year to October 1, from £3.5m a year earlier, but sales rose to £23.1m from £21.7m.

Chairman Richard Shacklady said: “The group is now well along the path of transforming itself, both organically and through strategic acquisition.

“We are exploring further acquisition opportunities and anticipate the transformation of the group to stretch across the next 12 to 18 months with the benefits starting to show in the current financial year.”

He said that the decision to maintain the final dividend at 4.4p a share reflected the group’s confidence in its prospects and financial position.

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“We are confident that the group has the ability to adapt to changes in market conditions and profitably exploit the opportunities which arise.”

In October, Pressure issued its second profits warning of the year after increased competition and higher costs took their toll.

The company initially warned over 2011 profits in April, as delays in the offshore oil and gas market hit trading.

Yesterday Mr Shacklady said: “It is disappointing to confirm that the group’s results for the full year have, as announced on October 21, fallen substantially below market expectations. I am pleased to report that the much delayed recovery in equipment ordering for the deepwater offshore oil and gas drilling sector is now underway and there was a notable acceleration of firm orders at Chesterfield Special Cylinders in the second half of the year.”

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He added that demand for oilfield wellhead components and equipment from the engineered products division remains buoyant and is underpinned by heavy investment in the US oil and gas sector.

Pressure said the delayed announcement of the Renewable Heat Incentive had a knock-on effect on orders at the group’s alternative energy business, Chesterfield BioGas.

But the division has a number of major quotations at an advanced stage, which the group believes will be converted to firm contracts during this financial year.

Pressure said that its overall order book has increased by 50 per cent in the past six months and now stretches well into 2012.

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“We have not seen this level of activity in these markets since 2008/09,” said Mr Shacklady.

“Activity in the global oil and gas industry has returned and shows no sign of waning.

“We expect this momentum to stretch into 2013 for long lead time products, notably our ultra-large cylinders for the deep water drilling market.”

Pressure said that it is expecting to experience further growth in its engineered products division, particularly in the North American market where it said it has managed to secure a significant foothold.

Analysts at housebroker Fairfax said: “The business continues to recover, orders are accelerating, although gross margins are less on new oil and gas projects.”