TIDMPRES
RNS Number : 6007P
Pressure Technologies PLC
30 May 2018
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THE MARKET ABUSE REGULATION. UPON THE PUBLICATION OF THE
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30 May 2018
Pressure Technologies plc
("Pressure Technologies" or the "Group")
Trading Update
Pressure Technologies plc, the specialist engineering Group
today issues an update ahead of its interim results for the 26
weeks to 31 March 2018, which will be announced on Tuesday 12 June
2018.
Alternative Energy Division
The Alternative Energy Division (AE Division) has scored several
notable successes since the start of the current financial year,
which demonstrates our continued leadership in the biogas upgrading
market. Notably, we have installed the world's first biogas
upgrader which complies with very strict Californian standards and
we have commissioned the world's largest biogas upgrader, in
Arizona. Strategic relationships have been formed one of which will
give us access to Pressure Swing Adsorption (PSA) technology,
thereby expanding our product portfolio and broadening our market
access.
As mentioned in the 2017 annual report, the biogas market offers
substantial potential, but has been frustratingly slow to deliver
and it is disappointing to report that only three new upgrader
contracts have been awarded since October 2017. The most common
reason for this is delays in customer decision making. In North and
South America, delays have arisen due to slowness in obtaining
environmental permits, complexity of contract negotiations and
customer funding arrangements. Delays in the UK have been primarily
caused by the Renewable Heat Incentive (RHI) legislation
progressing slowly through Parliament, which was approved on 22 May
2018, some
four months later than the energy market expected.
Profit recognition for our upgrading projects is necessarily
skewed towards completion, so delays in contract awards experienced
to-date will negatively impact our 2018 results and the Division
will be loss making for the year.
Following a detailed review of the AE Division and its target
markets, we are exploring a number of strategic options that have
the potential to unlock value for shareholders.
Set against the background of increasing opportunities in North
America and Europe, the Board's view remains positive for the
prospects of the Division.
Manufacturing Divisions
Of the three Manufacturing Divisions, Precision Machined
Components ("PMC") and Engineered Products ("EP") remain
predominantly focused on the global oil and gas market with
Cylinders transitioned from a reliance on oil and gas to the
defence market.
Precision Machined Components and Engineered Products
It is clear that the oil and gas market is improving, although
we see some variability in the order intake. For the last three
half-years, PMC has consistently seen order intake rising: from
GBP4.9 million in the first-half of 2017, to GBP6.5 million during
the first-half of this year. Order intake at the start of the
third-quarter has been a little muted, but requests for quotations
have accelerated, particularly at Quadscot, and are at the highest
level since the start of the market downturn in 2014. The recent
slowing of order intake makes us slightly more cautious about PMC
Division's full-year outlook but with short order to delivery
lead-times now the market norm, this can change within a
quarter.
EP started from a lower base than PMC and is trading in line
with management expectations with a significantly stronger
second-half pipeline of quotations.
Cylinders
The Division's major focus for the current and next financial
year is to supply the first boat set of cylinders for the
Dreadnought submarine programme (Trident replacement).
Manufacturing of standard design naval cylinders has commenced for
this project, but we await the order to start manufacture of the
programme specific cylinders. Timing of this will now move revenue
and profit between financial years, with any shortfall in 2018
recovered in 2019. Encouragingly, a number of other UK and overseas
defence projects have been won, including an order for cylinders
for the MoD's Type 26 Frigate programme.
The Division's Integrity Management service has had considerable
success in the defence market, with the award of contracts in the
UK and in Germany, the timing of which will benefit 2019 sales.
Whilst the oil and gas market has reduced in importance for the
Division, it is pleasing to note that two orders for the supply of
air pressure vessels for drillship projects have been secured; the
only two new projects placed globally in the last three years. This
demonstrates the Division's reputation and continuing cost
competitiveness in this market.
Outlook
Our Manufacturing Divisions continue to have a strong position
in the global, safety critical markets they serve. With an upturn
in the oil and gas market and a well developed position in the
defence market, the short-term challenges for these Divisions are
largely ones of timing. Similarly, while markets for our AE
Division are expanding we continue to experience frustration in the
timing of securing contracts.
Whilst these timing issues do not affect the medium-term
prospects for the Group they do have a material short-term impact.
The outturn for the AE Division is now dictated by projects already
in execution, which are insufficient to avoid incurring financial
losses for the full-year. Delays to the start of the next stage of
the Dreadnought programme will also impact Cylinder's current year
but the full extent of this will not be clear until quarter four.
The cumulative short-term effect of these means that the Group's
results for the full year are expected to be substantially below
market expectations.
The interim results will be announced at 07:00 on Tuesday 12
June 2018.
For further information, please contact:
Pressure Technologies plc Tel: 0114 257 3622
John Hayward, Chief Executive www.pressuretechnologies.com
Officer
Joanna Allen, Chief Financial
Officer
Keeley Clarke, Investor Relations
Cantor Fitzgerald Europe (Nominated Tel: 020 7894 8337
Adviser and Broker)
Philip Davies / Will Goode
COMPANY DESCRIPTION
Company description - www.pressuretechnologies.com
With its head office in Sheffield, Pressure Technologies was
founded on its leading market position as a designer and
manufacturer of high-pressure components and systems serving the
global energy, defence and industrial gases markets. Today it
continues to serve those markets from a broader engineering base
with specialist precision engineering businesses and has a
worldwide presence in Alternative Energy as a global leader in
biogas upgrading.
Pressure Technologies has four divisions, Precision Machined
Components, Engineered Products, Cylinders and Alternative Energy,
serving four main markets: oil and gas, defence, industrial gases
and alternative energy.
Precision Machined Components - www.pt-pmc.com
-- Al-Met, Mid Glamorgan, acquired in 2010 www.almet.co.uk
-- Roota Engineering, Rotherham, acquired in March 2014 www.roota.co.uk
-- Quadscot, Glasgow, acquired in October 2014 www.quadscot.co.uk
-- Martract Limited, Barton-on-Humber, acquired in December 2016 www.martract.co.uk
Engineered Products
-- Hydratron, Manchester, acquired in 2010 www.hydratron.com
Cylinders
-- Chesterfield Special Cylinders, Sheffield, IPO cornerstone in
2007 and includes, CSC Deutschland Gmbh, which is based in Dorsten,
Germany and Chesterfield Special Cylinders Inc. which is based in
Houston, USA www.chesterfieldcylinders.com
Alternative Energy
-- Greenlane Biogas, Vancouver, Canada and Sheffield, UK,
acquired in October 2014 www.greenlanebiogas.com
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END
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