Wednesday, December 14, 2016

News: Pressure Technologies looks beyond oil and gas markets

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Roota Engineering, the Rotherham-based sub contract precision engineering company, has been given a focus to diversify outside of oil and gas markets by its parent company, AIM-listed Pressure Technologies.

The Sheffield firm posted revenues for the year ended October 1 of £35.8m, down from the £53.8m revenues recorded in the previous year as manufacturing businesses continued to face declining sales volume from the oil and gas market. The adjusted operating profit was a loss of £400,000 compared to the profit of £3.8m in the previous 12 months.

Pressure Technologies plc owns Chesterfield Special Cylinders, a leader in the design, development and manufacture of high pressure seamless steel gas cylinders, and has gone on to bring in the likes of Chesterfield BioGas and Al-Met Limited and Hydratron group of companies. It acquired Roota in March 2014 in a deal worth £13.5m, taking on its Meadowbank Industrial Estate facility that has both CNC and conventional turning and milling capabilities and specialises in the machining of difficult materials and exotic alloys such as inconels and monel along with a wide range of high strength carbon steels.

A restructure of the manufacturing divisions followed with Roota and three other manufacturing subsidiaries making up the Precision Machined Components division. Restructuring completed with the manufacturing divisions shedding 77 jobs over the last 12 months.

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An update to the stock exchange read: "The Group is far more resilient, with manufacturing divisions now aligned to be profitable in the current market and an alternative energy division on the brink of a breakthrough to sustainable revenues and profits."

Alan Wilson, chairman of Pressure technologies, said: "For the first time in the Group's history, less than half, 43%, of our revenues came from the oil and gas sector, with alternative energy and defence making significant contributions of 32% and 18% respectively.

"The underlying qualities of our manufacturing divisions and the swift management action taken at the beginning of the downturn in the oil and gas market are evidenced by the results from these divisions, which overall remained both profitable and cash generative."

The Precision Machined Components Division turned over £10.7m, a drop from the £18.8m posted in 2015 with revenues almost wholly derived from the oil and gas market. Adjusted operating profits for the division were £1.4m (£4.5m in 2015).

The update added that with the reductions in customer spending, Roota's niche capability for machining complex geometrical shapes in unforgiving materials helped to increase market share and developed new customers in the falling market. £300,000 was invested over the year, principally on equipment to improve productivity, with the major spend centred on Roota, which saw an increase in orders for April and May.

Pressure Technologies expects that the oil and gas market "will remain very important to the division, which has market leading capabilities to manufacture highly complex components to exacting tolerances in demanding materials. These capabilities are important to the market irrespective of activity levels.

"However, the division continues to seek out opportunities for diversification away from the oil and gas market. In the longer-term work done to obtain "Fit for Nuclear" accreditation [from the Nuclear AMRC in Rotherham] should translate into incremental revenues and the division continues to seek entry points into the defence, aerospace and automotive markets."

Pressure Technologies website

Images: Pressure Technologies


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