Strong hydrogen demand boosts Pressure Technologies

Engineering group Pressure Technologies said momentum is gathering in the fast-developing hydrogen energy market, with over £1.4m of refuelling station contract wins since December and improving visibility of future demand.

Chris Walters, chief executive of Pressure Technologies

The Sheffield-based firm has said it is excited about the opportunities in the hydrogen energy market at a time when the oil and gas markets are proving difficult.

The group has won its first hydrogen storage contract with Shell under a five-year framework agreement. A second order is expected imminently for European refuelling station projects.

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Pressure Technologies said it is investing in people and production facilities to support its hydrogen growth at the Chesterfield Special Cylinders (CSC) Sheffield site, which will deliver significant capacity increases by the end of 2022.

It has established a long term supply agreement with steel tube manufacturer, Vallourec, and strategic stock orders have been placed to meet hydrogen-related demand.

Overall group revenue rose 4 per cent to £14.5m in the six months to April 3, with a strong performance from CSC more than offsetting continued weakness in Precision Machined Components (PMC).

A strong defence order book underpinned a 79 per cent increase in revenue for CSC.

Oil and gas trading conditions resulted in a 58 per cent reduction in revenue for PMC.

The group's May PMC order book reached the highest level since October and OEM customers are reporting an improving outlook for the second half of 2021 and a steady recovery in 2022.

The group made a pre-tax profit of £200,000, up from a £1.5m loss in the previous half year.

Chris Walters, chief executive of Pressure Technologies, said: “The group's strategy remains focused on the continued development and growth of both divisions and the board is pleased with the progress being made.

"A strong performance in the first half of the year was driven by major defence and nuclear contracts in Chesterfield Special Cylinders, more than offsetting the weakness in its Precision Machined Components division which continues to be impacted by the challenging trading conditions across the oil and gas industry.

"The backdrop of Covid-19 related challenges continues to impact the outlook in the second half. In Chesterfield Special Cylinders, project delays have affected the outlook for Integrity management deployments, while defence contract phasing, late steel deliveries and several delayed customer orders are also expected to push significant revenue and margin from the second half of FY21 into FY22.

"However, the order book in Chesterfield Special Cylinders remains strong and momentum continues to gather in the fast-developing hydrogen energy market, with over £1.4m of refuelling station contract wins since December 2020 and improving visibility of future demand. The group has also secured its first order with Shell under the five-year framework agreement announced in June 2020.

"Despite the impact of operational delays in Chesterfield Special Cylinders and the slower than expected recovery in the oil and gas market affecting Precision Machined Components, the board remains confident in the prospects and opportunities for the business in the medium term.”