"We've never had a busier year," says Pressure Technologies (PRES) chief John Hayward. "But the oil news is scaring investors." Although the Sheffield-based engineering group posted record revenues, a 14 per cent increase in its order book, growth in all divisions and a near-doubling of operating profit to £5.6m, its dependence on the oil and gas sector sent the shares plummeting 12 per cent on results day.
Mr Hayward accepts that Pressure's cylinder segment will be hit hard by a low oil price, as weak capital spending is likely to put a stop to oil-rig construction. But he reckons the group is much better prepared for cutbacks in its core oil and gas division than when energy prices last took a hit, in 2009.
Pressure's diversification strategy was given a boost by a £16.1m share placing in March. The proceeds were used to bolster its engineered products and alternative energy divisions, which are both expanding rapidly.
Alternative energy, Pressure's smallest business, posted a 30 per cent increase in orders, and Mr Hayward believes the international exposure brought by the Greenlane Biogas acquisition will prolong this trend. This growth, he reckons, should help counteract the effect of a volatile oil price.
Broker Charles Stanley nonetheless downgraded its pre-tax profit forecast for the year to £9m, giving adjusted EPS of 49.0p.
| PRESSURE TECHNOLOGIES (PRES) | ||||
|---|---|---|---|---|
| ORD PRICE: | 563p | MARKET VALUE: | £81m | |
| TOUCH: | 560-565p | 12-MONTH HIGH: | 793p | LOW:404p |
| DIVIDEND YIELD: | 1% | PE RATIO: | 20 | |
| NET ASSET VALUE: | 254p* | NET CASH: | £5.8m | |
| Year to 27 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 21.7 | 3.51 | 22.3 | 7.20 |
| 2011 | 23.1 | 0.58 | 3.5 | 7.20 |
| 2012 | 30.4 | 1.78 | 11.2 | 7.50 |
| 2013 | 34.4 | 2.88 | 19.4 | 7.80 |
| 2014 | 54.0 | 5.35 | 28.5 | 8.40 |
| % change | +57 | +86 | +47 | +8 |
Ex-div: 19 Feb Payment: 17 Mar *Includes intangible assets of £14m, or 98p a share | ||||
