Annual profits up for oil and gas supplier Duco

Nov 12 2009 by Andrew Mernin, The Journal

OIL and gas industry supplier Duco has revealed annual profits ahead of expectations despite a 43% plunge in turnover amid the ongoing tough climate.

The firm, which employs about 350 people on Tyneside, saw annual revenues fall from £90m to £52m in the year to December 2008, however, profits held up at £9m.

The business – owned by French group Technip – said it offset the drop in orders by closing out some contractual claims on old projects.

It also stepped up efforts to reduce project costs and lower overheads to match the lower level of activity.

The company said it expected this year’s financial performance to bring similar profit levels despite the difficult conditions caused by low oil and gas prices and a lack of available finance for new projects.

A company statement said: “2008 has seen significantly reduced levels of activity. It has been very important to deliver strong project performance and to surpass client expectations.

“Key performance indicators in this area remain focused on these goals.”

George Rafferty, chief executive of oil and gas industry body NOF Energy said Duco’s results highlighted the difficulties experienced firms in the industry during the downturn.

He also said it may be some time before the market returns to the conditions enjoyed prior to the recession.

He said: “All the indications are that the first half of 2009 has been difficult, and over the first half of 2010 we will see difficult trading conditions continuing, but in the second half of 2010 we should start to see things improving.

“By 2011 we will see things getting significantly better.”

From its site in Walker, Duco manufactures flexible pipes for deep-sea oil and gas extraction, known as umbilicals.

It has sister facilities in Angola, West Africa and Houston, in the US, and last year the company landed a £20m deal with oil giant BP which helped safeguard jobs at the Tyneside plant.