2nd Dec 2024 12:06
(Alliance News) - Tekmar Group PLC on Monday said it expects to report higher adjusted earnings despite a contraction in revenue, citing sub-scale order intake amid a significant improvement in gross profit margin.
The Newton Aycliffe, England-based technology and services provider for global offshore energy markets said it expects to report adjusted revenue of about GBP32 million for the financial year that ended September 30, down 11% from GBP36 million it had reported for financial 2023.
However, Tekmar anticipates that adjusted earnings before interest, tax, depreciation and amortisation will improve to about GBP1.8 million from GBP600,000 a year ago, the highest full-year adjusted Ebitda since financial 2020.
This is due to a sharp improvement in the gross profit margin, expected to be above 30% compared to 23% in financial 2023.
The adjusted figures exclude the full-year contribution of Subsea Innovation Ltd, which was disposed in May this year and is therefore reported as a discontinued operation.
"Like many others in our industry, our capability has not borne satisfactory results in recent years, evident by sub-scale order intake, earnings and weak cash flow. Market conditions have been challenging, in particular across the offshore wind sector as developers struggled to contend with systemic design issues, escalating material costs and higher interest rates - factors that were incompatible with historic low strike prices," Chief Executive Officer Richard Turner said.
"2024 has been a transitionary year for Tekmar, where we have focused on the basics - providing high quality engineering, delivering on time and maintaining consistent commercial discipline. Looking forward, we now have a structured organic growth plan which aims to progressively build a business with true strength and resilience. Resilience afforded to us by larger and more diversified revenue streams, with higher margins and positive cash flows. 2025 is where we underpin the foundations of growth where we focus on backlog expansion to support sustained and profitable growth in the years to follow."
Tekmar added it started financial 2025 with an order book of GBP16 million, down 34% from GBP24.1 million at March 31.
"The board is encouraged that the market environment is steadily improving into 2025 and beyond. Moreover, Tekmar's differentiated technology positions the group to outperform this improving market. This is supported by the group's developing sales pipeline, however it will take time for this activity to convert to orders and revenue," the company said.
It added that it has developed a three-year plan aimed at driving higher order intake across its existing portfolio of products and services.
Tekmar shares were 1.8% higher at 7.25 pence each around noon in London on Monday.
By Tom Budszus, Alliance News slot editor
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