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LONDON (Alliance News) - Pressure Technologies PLC shares rose on Tuesday after it reported a material fall in profit during the last financial year despite revenue experiencing a small rise and said although trading conditions remain difficult, the long term fundamentals of the business remain robust.
Pressure Technologies shares were trading up 8.4% to 196.16 pence per share on Tuesday morning.
The engineering group serving the global energy, defence and industrial gases markets reported a substantial fall in pretax profit in the year ended October 3 to only GBP578,000 from the GBP5.3 million profit reported a year earlier, despite revenue experiencing a small rise.
Revenue came in at GBP55.6 million compared to GBP54.0 million, despite some of its market, specifically the oil and gas sectors, being hit by lower oil prices and entering a downturn.
Administrative expenses rose by GBP4.5 million year-on-year and the company also booked GBP425,000 in exceptional charges compared to nil a year earlier. Those rises were partially offset by amortisation and exceptional items related to acquisitions dropping to GBP291,000 from GBP1.6 million a year ago.
Operating profit before acquisition costs, exceptional charges and amortisation came in at GBP3.3 million compared to GBP7.8 million a year earlier with earnings before interest, tax, depreciation, amortisation and those items falling to GBP4.7 million from GBP8.7 million.
Pressure Technologies said its full year results were "slightly ahead of expectations".
Despite the fall in earnings, Pressure Technologies retained its final dividend of 5.60 pence, leaving its total dividend for the financial year unchanged at 8.40p.
Pressure Technologies has four key divisions all comprised of numerous companies that Pressure Technologies has acquired between 2007 and 2015.
The Precision Machined Component division, made up of Al-Met, Roota Engineering and Quadscot, reported a decent set of results during the year with revenue rising to GBP18.8 million from GBP13.0 million, producing an operating profit before items of GBP4.5 million compared to a GBP3.0 million profit a year ago.
"The division had an excellent first-half performance but demand weakened markedly in the second-half as the downturn in investment in the oil and gas market deepened. Long established customer relationships and the ability to give high quality, short lead time deliveries gave some measure of protection to the order book but at much lower levels than that experienced up to the half-year," said the company.
The Engineered Products division, comprised of UK-based Hydration Ltd and US-based Hydration Inc, had a "difficult" year as revenue fell to GBP8.4 million from GBP11.1 million, leading to an operating loss before items of GBP400,000 compared to a GBP1.6 million profit a year ago.
The UK-based Hydration had a strong order book at the start of the financial year but was hit by "project execution issues" which pushed up operating costs and restricted new order intake. The US-based Hydration was hit by the immediate downturn in the oil and gas markets throughout the whole year.
The Cylinders division, which refers to Chesterfield Special Cylinders and Kelley GTM Manufacturing, reported a fall in revenue to GBP14.3 million from GBP21.4 million, yielding an operating profit before items of GBP2.1 million, dropping from GBP3.8 million a year ago.
Lastly, the Alternative Energy division, comprised of Chesterfield Biogas and Greenlane, booked a rise in revenue to GBP14.0 million from GBP8.4 million, but swung to an operating loss before items of GBP1.1 million compared to a GBP1.1 million profit a year earlier.
"This was a tough year for the group due to the downturn in the oil and gas market. Substantial progress has been made in restructuring to meet the challenges of reduced revenues. With continued pressure on the oil price due to a combination of over-supply and weak demand the board is of the opinion that any major recovery in that market will not occur before the end of the 2016 financial year," said Chief executive John Hayward.
"Whilst current trading conditions for the majority of our businesses remain challenging, the group is much more diverse and better balanced than in the previous low in the oil and gas market. The board remains confident in the medium to long-term prospects for the group," he added.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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