Pressure Technologies manufacturing divisions performing 'well'

Specialist engineering group Pressure Technologies announced an update on recent trading and expectations for the year to 30 September on Thursday.

The AIM-traded company said its manufacturing divisions continued to perform “well”, aided by a stabilised and increasing order load in the ‘Precision Machined Components’ (PMC) and ‘Engineered Products’ (EP) divisions and a solid defence order book in the cylinders division.

It said the oil market was experiencing “some increase in confidence” as the majors had adapted to be profitable in the lower oil price environment.

“The increase in orders in PMC is evidence of this as is the receipt of an order in cylinders for a drillship project for delivery in 2018, the first for three years,” the board said in its statement.

“At this stage in the financial year, with five weeks of trading remaining, we anticipate that collectively the manufacturing businesses will at least meet current market expectations.”

As it highlighted in the interim statement released in June, the result for the year for the ‘Alternative Energy’ division (AE) remained dependent on order intake in the second half.

“Whilst the division will report a significantly improved performance over the financial year 2016, it is now apparent that customers have pushed back decision dates on projects.

“As a consequence of this slippage and cost overruns on certain European projects, AE will post a result below market expectations.”

Notwithstanding the positive news that the manufacturing divisions were performing strongly and that cash flow was being well controlled, the board said it still expected that it would report results materially behind market expectations for the current financial year.

Looking ahead, the predicted order load for PMC and the defence contracts already secured by cylinders gave the board confidence that market expectations for financial year 2018 for its manufacturing divisions would be exceeded.

“The 2018 outturn for AE relies on contracts which are still in negotiation.

“The board is conscious of the impact that timing has on forecasts and believes a prudent approach to 2018 is appropriate.

“However, the order pipeline remains strong particularly in North America as this large market comes to understand the economic and environmental benefits of using waste for energy.”

Pressure Technologies’ board said it was still confident in the medium to long term prospects for the group, underpinned by a stabilising oil market, strong defence contracts and a growing global market in waste to energy solutions for which AE - under the Greenlane brand - was said to be a “world leader” in biogas upgrading.

“The audited preliminary results for the year ending 30 September 2017 will be announced on 12 December,” the board confirmed.