Northbridge trades in line, though suffers from weak sterling

Industrial services and rental company Northbridge issued a pre-close trading statement on Thursday, in advance of its preliminary results announcement for the year ended 31 December, scheduled to be released during the week of 24 April.

The AIM-traded company said recent trading had been consistent with internal forecasts, and consequently the group expected the result for 2016 to be broadly in line with management's expectations.

Northbridge said it has two core activities - Crestchic, a specialist electrical equipment business; and Tasman Oil Tools, which rents drilling equipment to the oil, gas and geothermal industries from its sites in Australia, New Zealand and Dubai.

Following a strategic review in 2015, all of Northbridge's other activities were considered non-core and were disposed of ,and the cash generated was released back to the group.

The slowdown in the oil and gas industry, which suffered an estimated $740bn cut in planned capital expenditure since 2015, had a substantial impact on all of Northbridge's businesses which serve that market, the board explained.

“Following the agreement between OPEC and other oil producing countries to restrict production from 1 January 2017 the price of crude oil has increased from its lows and, if maintained, will reduce the current surplus by the second half of 2017,” it said in its statement.

“This is likely to lead to a revival in exploration and production investment and we expect the group to benefit from this in time.”

However, it was still too early to predict the timing and impact of any recovery in Northbridge’s markets in 2017.

The fluctuation in the value of sterling following the EU referendum vote in June had a material impact on its accounts, most positively on the balance sheet and gearing where a substantial proportion of the company’s assets were held overseas, though its bank debt was in the UK.

“Conversely trading losses from our overseas businesses most actively involved in the oil and gas market have also increased on translation.”