Oil prices see Northbridge suffer in Dubai, down under

Northbridge Industrial Services warned the market of muted activity in a pre-close trading update on Thursday, as it faced tough market conditions in the South Pacific and the Middle East amid the low global oil price environment.

The AIM-traded industrial services and rental company said it expected the result for 2015 to be largely in line with management expectations, though it was too early to predict when any recovery would come to its markets in 2016.

Northbridge said that, following its last statement regarding the agreement of revised covenants issued on 17 December 2015, there had been further falls in oil prices and commodity markets in general.

"Though this has continued to affect much of our customer base, gollowing completion of the group's restructuring and the further cost cutting measures undertaken in the second half of 2015, Northbridge now is a much more slim-lined and focused group", the company's board said in a statement.

"Despite these challenging markets, [the company] is now much better placed to take advantage of any upturn when it arrives", it added.

Northbridge had been consolidated to two main core activities operatying through the two main subsidiaries - Crestchic and Tasman Oil Tools.

Crestchic manufactured and rented loadbanks and transformers from its base in Burton-on-Trent, the company said, with depots in France, Germany, Belgium, Dubai and Singapore and satellite locations in China and the USA.

Tasman Oil Tools rented drilling equipment to the oil, gas and geothermal industries from sites in Australia, New Zealand and Dubai.

"The slowdown in the oil and gas industry has had a substantial impact on all of Northbridge's businesses serving that market, where there has been an estimated $400bn (£274.4bn) cut in capital expenditure since July 2014", the board explained.

As a result, Northbridge said its rental activities relating to the energy sector continued to suffer, affecting both oil tools and loadbanks.

"In contrast, the loadbanks and transformers operating out of Europe have had a good year, where the lower cost of fuel oil has increased investment in load testing generators, and transformer rental contracts have been extended leading to a record level of activity for the group.

Further cost cutting measures had been implemented at Northbridge, which the board said would benefit 2016 if the downturn was prolonged.