A Teesside engineering firm’s gross profits are back in the black after making a change in its strategic direction.
Award-winning Wilton Engineering Services, based in Stockton, carried out a group reorganisation in 2013 which triggered a switch in focus from higher-risk, one-off large contracts to higher numbers of smaller projects.
Working within the marine, offshore and subsea sectors, Wilton was established in 1994 and has completed structures weighing up to 12,000 tonnes on site and undertaken work including subsea structures, pipeline clamps and platform and subsea protection structures.
Its decision to change strategy to smaller, predominantly subsea projects is laid out in the firm’s latest accounts for the year ended June 2014, which show a sharp drop in turnover as a result, from £42.4m to £20.1m, but also show a gross loss of £1.39m was converted to gross profits of £2.08m.
The accounts also show a significant narrowing of the company’s operating losses, from £5.3m to £1.477m and pre-tax losses of £2.9m were also almost halved to £1.476m.
During the year the firm’s headcount was also reduced significantly, from an average number of monthly employs of 341 to 186.
A report accompanying the accounts by chief executive Bill Scott, who was named North East Business Executive of the Year in 2011 and the Entrepreneurs’ Forum Entrepreneur of the Year in 2012, details how the firm has now re-established its order book.
The report said: “Following a group reorganisation in May 2013 the company changed strategic direction, moving away from one-off larger contracts, typically circa £35m comprising of multi-disciplined topside structure projects, which in many cases have significant bonding requirements, absorb significant working capital and carry higher than average risk.
“The business is now focusing on delivering a higher volume of smaller projects, typically in the subsea sector which will be in the range of £1m and £5m in value.
“These projects will be delivered on a quicker turnaround basis, which is many cases will negate the need for bonding, give much more diversified work scopes and the projects will be more readily available which will assist with long term sustainability.
“The management team have concentrated their efforts on winning contracts in line with our business strategy and in building confidence within its refined customer base.
“The company has succeeded in winning new contracts by demonstrating its engineering, technical and manufacturing competencies.
“Long term strategic partnering with good quality clients is the focus for the management team as the business moves forward.”
As well as seeing a fall in turnover the group’s fabrication and storage facility was also hit by a flood in December 2013, which reduced site capacity for 12 weeks.
Despite those challenges gross profit increased to 10.3% from 2.4% before exceptional costs, and the firm has worked with the Environment Agency to effect a robust flood defence system.
Last year the Stockton business secured a loan from the Tees Valley Catalyst Fund, which was established to help firms provide vital security for contracts that will ultimately create and sustain jobs in the area.
The firm completed a £33m project for the world’s largest independent oil and gas exploration and production company, ConocoPhillips, and it used a £1.2m loan from the Catalyst Fund to finance the project’s warranty bond with Lloyds Bank.