Engineering company Pressure Technologies said there will be a loss in its full year results, against market expectations, due to delays and legacy costs to upcoming projects.
Trading in Pressure Technologies' three manufacturing divisions, cylinders, precision machined components and engineered products have been in line with market expectations and the company said, despite the ongoing challenges of the oil and gas market, there had been some positive developments during the year.
The alternative energy division secured a further £8.5m of contracts and a conditional award of a £6.5m contract to add to the £10m which were signed in the first half of the year.
The AIM-listed company said the outcome for the current year is dependent on the timing of contracts in the alternative energy division and any delays will impede 2016 financial year results, but benefit results for the 2017 financial year.
The company has also encountered some unanticipated additional legacy costs and margin erosion on a project in North America. These factors, along with research and development costs have been charged to the profit and loss account as part of the company's tax planning, which will swing the division from a profit to a loss which will impact results.
The precision machined components division increased market share by securing a number of new customers and diversifying into new markets. The company's South Wales subsidiary Al-Met won its single largest ever order of $1.2m from the water industry.
The cylinder division focused on the defence market and its integrity management service, and is in the process of gaining US Department of Transportation approval for its latest generation of transportable jumbo cylinders.
A final payment of £2.3m was paid in July for its acquisition of Roota Engineering, which will be compensated by operational cash and receipts from contracts which have been paid or are due before the end of the year. The company expects to meet its banking covenant tests by the end of the financial year.
Pressure Technologies said: "Looking to the 2017 financial year, trading conditions in the oil and gas market continue to be challenging and while the market is balancing, the outlook for recovery is slow. We therefore anticipate that trading in our manufacturing divisions will remain around its current level throughout the next financial year.
"The board remains confident in the medium to long-term prospects for the group and believes that when the oil and gas market returns it will present considerable opportunities. In the meantime, we will take whatever measures are necessary to ensure the resilience of our businesses whilst continuing to invest in the future of the group and implement the strategic objectives to broaden our customer, technology and industrial base."
Shares in Pressure Technologies were down 9.84% to 142p at 1420 BST.