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Pressure Technologies wins £3m nitrogen storage contract as oil sector struggles
30th Sep 2020 17:44
(Sharecast News) - Specialist engineering group Pressure Technologies updated the market on a new contract award and a milestone delay on an existing contract on Wednesday, confirming that its Chesterfield Special Cylinders (CSC) division has secured a significant contract of more than £3m, to supply nitrogen storage solutions to EDF Energy for several UK nuclear power plants.
The AIM-traded firm said the second major order with EDF Energy comprised ultra-large high-pressure cylinders manufactured at CSC's Sheffield facility, in a series of nitrogen storage packages, for delivery through to the middle of the 2021 financial year.
It said the contract would build on a "strong and successful" relationship with EDF Energy, following the first contract in October 2019.
In June, CSC secured an order from long-standing customer BAE Systems, for the supply of cylinders to the UK Ministry of Defence's Dreadnought class submarine programme, covering the long lead time raw material milestone for the second boat in the series.
Delayed order placement, and a compressed delivery schedule, were expected to result in the late receipt of material and the deferral of revenue and profit driven by that milestone from the fourth quarter of 2020 into the first quarter of 2021.
Pressure Technologies said the major contracts with EDF Energy and BAE Systems reinforced the "strong outlook" for its CSC division, and demonstrated further progress with its strategy to diversify the business into new markets, reducing a historical dependence on the oil and gas sector, where the "challenging" trading conditions and slower-than-expected turnaround, compounded by the Covid-19 pandemic, continued to adversely impact the performance of its Precision Machined Components division.
"Despite a series of proactive steps taken in PMC earlier in the year, including the closure of its loss-making Quadscot operation, divisional restructuring and cost savings, the group expects an operating loss for the division in the 2020 financial year," the board said in its statement.
"When combined with a lower profit anticipated in CSC, principally reflecting the expected milestone delay in the BAE Systems contract, a loss-making performance at group level is expected for the current financial year."
Pressure Technologies said it would release a further trading update in the second half of October, following completion of the current year-end on 3 October.
At the close on Wednesday, shares in Pressure Technologies were down 2.33% at 63p.
The AIM-traded firm said the second major order with EDF Energy comprised ultra-large high-pressure cylinders manufactured at CSC's Sheffield facility, in a series of nitrogen storage packages, for delivery through to the middle of the 2021 financial year.
It said the contract would build on a "strong and successful" relationship with EDF Energy, following the first contract in October 2019.
In June, CSC secured an order from long-standing customer BAE Systems, for the supply of cylinders to the UK Ministry of Defence's Dreadnought class submarine programme, covering the long lead time raw material milestone for the second boat in the series.
Delayed order placement, and a compressed delivery schedule, were expected to result in the late receipt of material and the deferral of revenue and profit driven by that milestone from the fourth quarter of 2020 into the first quarter of 2021.
Pressure Technologies said the major contracts with EDF Energy and BAE Systems reinforced the "strong outlook" for its CSC division, and demonstrated further progress with its strategy to diversify the business into new markets, reducing a historical dependence on the oil and gas sector, where the "challenging" trading conditions and slower-than-expected turnaround, compounded by the Covid-19 pandemic, continued to adversely impact the performance of its Precision Machined Components division.
"Despite a series of proactive steps taken in PMC earlier in the year, including the closure of its loss-making Quadscot operation, divisional restructuring and cost savings, the group expects an operating loss for the division in the 2020 financial year," the board said in its statement.
"When combined with a lower profit anticipated in CSC, principally reflecting the expected milestone delay in the BAE Systems contract, a loss-making performance at group level is expected for the current financial year."
Pressure Technologies said it would release a further trading update in the second half of October, following completion of the current year-end on 3 October.
At the close on Wednesday, shares in Pressure Technologies were down 2.33% at 63p.