In a trading update, the Sheffield-based company’s board said: “Trading in our three manufacturing divisions, cylinders, precision machined components and engineered products, overall continues to be in line with market expectations and despite the ongoing challenges of the oil and gas market there have been some positive developments.
“Since we announced the interim results in June, our Alternative Energy Division has secured a further £8.5 million of firm contracts and a conditional award of a contract for £6.5 million to add to the £10 million that were signed in the first half of the year. This includes two projects that will use our new Kauri plant, the world’s largest volume single upgrader.
The statement continued: “As we have highlighted previously, the outturn for the current year is dependent on the timing of contracts in this division.
“It is now clear that delays both in award and commencement on a number of these contracts, particularly in the US, will have a significant impact on the expected results for the year as a whole, albeit that the 2017 financial year will be positively impacted as a result. In addition to these delays, we have also encountered some unanticipated additional legacy costs and margin erosion on a first of type project in North America.
“These factors, coupled with R&D (research and development) spend that has been charged to the profit and loss account as part of our tax planning, will swing the division from a profit to a loss that will materially impact the group result.
“We now anticipate that the full year result at group level will be a loss, against a market expectation of a profit.”
Commenting on outlook for the 2017 financial year, the company said that trading conditions in the oil and gas market continue to be challenging, and while the market is balancing, the outlook for recovery is slow.
The statement said: “We therefore anticipate that trading in our manufacturing divisions will remain around its current level throughout the next financial year.”
“The board remains confident in the medium to long-term prospects for the group and believes that when the oil and gas market returns it will present considerable opportunities.
“In the meantime, we will take whatever measures are necessary to ensure the resilience of our businesses whilst continuing to invest in the future of the group and implement the strategic objectives to broaden our customer, technology and industrial base.”