EXOVA chief executive Ian El-Mokadem has said the metal testing specialist can see no sign of recovery in the North Sea but wants to retain expertise in Scotland in the belief one will come eventually.
Edinburgh-based Exova highlighted continuing pressure on its business in the North Sea in its annual results yesterday, when Mr El -Mokadem said it may shift investment from the UK if Brexit results in serious restrictions on free movement.
The results showed the division that tests metal for oil and gas clients faced strong headwinds in the year to 31 December in the North Sea. Exova highlighted the impact of cuts in activity and pressure on pricing amid the crude price plunge which started in 2014.
Mr El-Mokadem said there has been no sign that the partial recovery in crude prices in recent months will persuade clients in the North Sea to increase spending.
However, noting the rate of decline in the North Sea slowed last year he said the company is working on the assumption there will be an upturn in the area at some point: “We want to keep expertise so when recovery comes we are well placed to benefit from it.”
While Exova cut 200 oil and gas jobs globally last year, total employee numbers in its Aberdeen and Edinburgh laboratories remained fairly constant at around 60. Mr El-Mokadem said: “Scotland came out reasonably well and that’s part of trying to retain specialist capabilities. “
Exova found oil and gas market conditions worsened in areas such as North America and Asia last year.
Mr El-Mokadem said the company had a successful year, doing well in markets such as aerospace and building products.
Revenues rose 10.8 per cent, £32.1m, to £328.6m. But £24m of the increase was due to currency movements.
The fall in the value of the pound following the Brexit vote boosted the sterling value of overseas earnings.
Exova wants clarity on what Brexit will mean for businesses.
“If we see lots of restrictions on the movement of people and goods and services it will cause us to look outside the UK,” said Mr El-Mokadem. If restrictions are not so meaningful the UK is likely to remain a good place to invest.
Profits before tax increased eight per cent, £3.1m, to £43.5m in 2016.
Exova hiked the full year dividend to 3.4p per share from 3.2p.
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