A Dundee energy services company has warned that the challenging business environment created by the low price of oil could continue until at least 2017.
Safehouse Habitats suffered reduced turnover and profits because of the problems last year and is seeking to recover by diversifying into new markets.
The company is a specialist provider of isolation modules for high-risk, hot-work activities including welding on offshore rigs.
From global headquarters at Claverhouse, it has branches in Australia, the United States, Abu Dhabi and Malaysia. It was voted Scotland’s top small and medium-sized enterprise last year.
Director Gordon Mackay explained that the 12 months to May 2015, which included its takeover by Starn Energy Services, had not been easy.
Turnover was down 28% at £13.8 million and pre-tax profit fell 38.4% to £3.17m.
The marked decline in performance following a period of growth was due to factors from the prior year not being present.
Trading conditions in 2013 had been exceptional due to catching up on a backlog of North Sea maintenance work, and two substantial long-term contracts had ended.
The fall in the price of Brent Crude from above $100 to around $50 a barrel had worsened the situation, he explained. Safehouse had also taken longer than planned to establish overseas locations.
Oil related companies had cut expenditure which stifled opportunities for Safehouse and challenged its pricing.
Commentators contended that the present oil price will remain until 2017 at the earliest, and decisions on capital expenditure, decommissioning and maintenance programmes by upstream oil and gas companies will be made accordingly.
“If this contention proves accurate, the company will continue to experience depressed trading conditions with its upstream customers that have been the core of its business,” Mr Mackay stated.
Efforts are being made to drive business towards downstream opportunities including refineries and petrochemical complexes as well as other markets, including the drinks sector where pilot projects at distilleries had been well received.
He added: “It is not expected that this will result in a material change in the short term but management is confident that in the longer term this approach will build value to its business.”