Cosalt saw its shares slide to their lowest level in a year yesterday after it said trading was below market expectations.
The supplier of safety equipment and services to the offshore oil and gas and marine industries, which employs about 280 people at Bridge of Don, in Aberdeen, said an upturn in the second half of its current financial year to October may not be sufficient to counter the effect of a poor first six months.
Analysts had expected Cosalt to post pre-tax profits of £8.1million for the year, before one-off items and the warning sent its shares sliding nearly 21% to 53.25p.
Investment bank Evolution Securities forecast a 30% fall in earnings per share, compared with earlier estimates, and said pre-tax profits were likely to be off 26.5% at £6.1million.
Evolution analyst James Wheatcroft said a new partnership between Grimsby-based Cosalt and specialist wire-rope manufacturer Bridon should boost future trade. The tie-up with Bridon is expected to generate new North Sea business for Cosalt’s Aberdeen operation.
Cosalt’s customers operate in a wide range of industries and in some of the most hazardous places on Earth.
The firm’s offshore division – whose managing director is wealthy Aberdeen businessman and Dundee FC director Calum Melville – has bases in Aberdeen, Lowestoft and Stavanger.
Cosalt’s origins stretch back to 1873, when ship owners established The Great Grimsby Coal, Salt and Tanning Company to supply products allowing fishermen to carry out their work efficiently and safely.
Over the next 100 years or so the company expanded significantly, both organically and by acquiring specialist and established manufacturing businesses with products compatible with its own.
Prior to a flotation on the Stock Exchange in 1971, the firm shortened its name to Cosalt International and in 1972 received a Queen’s Award for export performance.
Cosalt’s growth continued into the 21st century, with further key acquisitions.
In its trading update yesterday, Cosalt said it had seen signs of an improved order book after a disappointing February and March.
It also said it was taking decisive action in response to market conditions and had extended its cost-reduction programme.
A spokesman for the firm said there were no plans for job cuts among the workforce, which last year totalled about 1,400 people.
Cosalt said it was now benefiting from new contracts, a strengthened management team and a more focused strategy, all of which would lead to further growth in the future.
The group closed its Fraserburgh office in January after 40 years of serving the local fishing industry, blaming a downturn in trade.