Wellstream is well on course for recovery this year

Mar 17 2010 by Karen Dent, The Journal

AN OIL and gas pipeline company which axed 200 jobs in Newcastle this year because of the global recession is optimistic the upturn will come in the second half of 2010.

Wellstream, which is based in Walker and also operates in Brazil, Australia and the US, reported record revenues of £400.7m for 2009, up 8% on the previous year.

But profits dipped by almost 45% from £77.5m in 2008 to £42.8m in the 12 months to December 31. The company, which cut the North East jobs because of project delays and a shrinking order book on the back of the worldwide economic downturn, said it was optimistic about the recovery in the offshore industry.

Acting chief executive Alastair MacDonald said: “We’re pleased with the topline growth here. There has been a strong focus on cash management and although we’ve had difficult market conditions through 2009, the actions we’ve taken have positioned us well for the recovery.

“Certainly the price of oil has stabilised and has stabilised at economic levels. We’re seeing a small number of awards, indicative of the recovery we’ll be going into in the second half.”

Although investment in and growth of offshore developments stalled in most of the world last year, the Brazilian market – which currently accounts for around 60% of Wellstream’s business – maintained its momentum.

Mr MacDonald said the Brazilian business with customer Petrobras was going “exceptionally well”.

“We have had an 80% capacity increase in Brazil and overall performance has been excellent,” he added.

Wellstream’s Brazilian facility produces pipelines to deal with local demand and the Tyneside plant serves the rest of the world.

Although intending to remain in the same geographical markets, Mr MacDonald said the company was seeking to broaden its client base from the “relatively small number” of high value customers it currently has on its books.

Wellstream is looking at the installation side of the business, partnership opportunities and the introduction of new product ranges.