3rd Feb 2015 09:08
LONDON (Alliance News) - Industrial services and rental company Northbridge Industrial Services PLC shares were trading lower on Tuesday morning after the company said it was taking a cautious view on 2015 owing to the impact of the falling oil price.
Northbridge said its results for 2014 to the end of December are expected to be broadly in line with its expectations, but said it is taking a "more prudent approach" to its guidance for 2015 given the uncertainty amongst companies operating in the oil and gas market.
The group reiterated, as it said earlier this month, that the fall in the oil price has thus far had only a limited impact on its business, but said it remains too early to define what the long-term effect of the falling oil price will be on the parts of its business directly servicing this sector. However, rental revenue visibility for the sector in 2015 is noticeably lower year-on-year, it said, leading it to forecast its results for 2015 will be below its previous expectations.
It said its Tasman division, which provides equipment for oil, gas and coal bed methane exploration and production in Asia Pacific and the Middle East, is the unit most directly tied to the oil and gas sector. But it notes the unit does not operate in the North or South American markets nor in the North Sea, where the costs of production are generally higher and which are therefore likely to be the most affected by spending cuts by oil and gas companies in the low oil price environment.
Crestchic Ltd, Northbridge's other main operating unit which sells and rents load testing equipment to the power sector, has some customers to provide services to the oil and gas industry, but is only likely to experience tangential effects from a long-term fall in the oil price.
"Although there is some uncertainty driven by the recent fall in crude oil prices, we will continue to focus on capital management and investing in our core businesses and we remain confident in the group's prospects for the future," said Eric Hook, chief executive officer of Northbridge.
Shares in Northbridge were down 6.0% to 390.00 pence on Tuesday.
By Sam Unsted; [email protected]; @SamUAtAlliance
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