LONDON—Fenner P.L.C. plans to reduce costs and postpone spending plans in response to falling oil and gas prices and continued weakness in its conveyor business.
The latest belt-tightening follows a good performance by its Advanced Engineered Products division but an increasingly challenging environment in the Engineered Conveyor Solutions division in the period from mid-November 2014 to mid-January.
In a trading update, the London-based group said the ECS division continued to be affected by oversupply in global mineral markets and correspondingly low commodity prices. Recovery in its markets continues to be deferred, it said.
Fenner's ECS division supplies conveying technologies to the global mining, power generation and bulk handling markets. It trades under the Fenner Dunlop, Fenner and Dunlop brand names.
Demand levels in the Americas remained flat, while, anticipated growth in EMEA has not been achieved, said Fenner. Margins were continuing to decline in Australia because of customer-driven price pressures.
While the AEP division had continued an improvement started in the second half of last year, Fenner said a recent fall in oil prices was set to impact its businesses involved in the oil and gas industry.
AEP supplies advanced polymer-based materials and technologies to industries including oil & gas—40 percent of its business—construction, transportation, automation and general industrial. Trading names include CDI Energy Products, Hallite, Fenner Precision and James Dawson.
In response to the challenges facing the ECS and AEP divisions, Fenner said: “Whilst seeking to ensure that the group preserves its flexibility to respond to any recovery in its markets, cost reduction programs have been implemented or accelerated and selected capital projects have been deferred across the group.”