Exova swings to profit despite oil and gas downturn

Ian El-Mokadem is predicting 'modest organic growth'
Ian El-Mokadem is predicting 'modest organic growth'
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MATERIALS testing group Exova has swung to a first-half profit, from a sharp loss a year ago, after overcoming a contraction in the oil and gas market.

The Edinburgh-based firm, which floated on London’s main market last year, also announced that former Wood Group boss Allister Langlands, its senior independent director, will succeed Fred Kindle as chairman at the start of next year.

A further boardroom change will see chief financial officer Anne Thorburn, who has held the position for the past six years, retire in 2016. Exova said it had started the search for her replacement.

For the six months to the end of June, the firm posted a statutory pre-tax profit of £10 million, against a £38.1m loss a year earlier, on revenues that rose 6.9 per cent on a constant currency basis to £142.4m.

Chief executive Ian El-Mokadem said 4.1 per cent of the sales growth came from the six acquisitions completed in the first half, and “the contribution to growth for the full year for those will be about 7.5 per cent”.

He added: “We expect organic growth in the second half to be a little bit softer as oil and gas weighs on the group, but we’re still sticking to our guidance for modest organic growth for the full year.”

Exova employs about 4,500 people around the world, including 225 in Scotland. It runs oil and gas laboratories in Aberdeen and Edinburgh, where it also has a pharmaceuticals facility, along with an environmental testing site in Glasgow.

El-Mokadem, who previously worked at Scottish Gas parent Centrica, joined Exova in 2011 from catering giant Compass, where he was managing director for the UK and Ireland.

He said about 30 jobs had been cut in Europe, with a further 20 in the Americas, as a result of the oil and gas downturn, “but what’s encouraging is that we’re seeing good growth in other sectors and overall the company is growing”.

Michael Blogg, an analyst at Investec, which has a “buy” rating on Exova’s shares, said: “The group is exposed to a range of markets and is performing well.”