Nigel Brice Divisional Chief Executive – Secure Power
Secure Power
“During 2009 we implemented a number of steps to better serve new markets and customers including opening a new service office in Aberdeen, broadening and enhancing our product range and establishing a presence in Brazil. Whilst we expect the market to remain difficult in 2010, I believe that these actions position the division well for continued future growth.”
The division has two principal operations: Ottomotores in Mexico and Dale Power Solutions in the UK. Both companies provide secure power solutions for customers’ critical power needs in selected markets worldwide.
Ottomotores manufactures generator sets and distributes uninterruptible power supplies (UPS) within Mexico and key markets in the Middle East and Latin America. Dale Power Solutions provides a similar product line within the UK and certain overseas markets. It has a particular focus on delivering bespoke power solutions to customers with mission critical power requirements, including utilities and companies in the petrochemical, financial services and healthcare sectors.
The Secure Power division has taken steps to increase export business with further development of its distribution network in Latin America, coupled with new sales and service offices opened in the Middle East during the latter part of 2009 and in Brazil in January 2010. The generator set and UPS product ranges have also been improved and extended.
As part of the strategic development of the Secure Power service business, a facility was opened in Aberdeen to support the Group’s growing offshore oil and gas maintenance customer and contract base in the region. This facility has already proved valuable in supporting a three-year agreement with Total E&P UK Ltd to provide service and maintenance, which was secured during the year. In addition, four regional support centres were established in Mexico to enhance customer service and improve the capture and retention of service business.
- Revenue £59.1m
- Operating profit £4.8m
Market conditions
2009 was a difficult year for the global secure power market with a reduction in new orders for large projects linked to construction, financial services and tourism, particularly in the UK and Middle East. The division was able to offset some of this market weakness through its focus on the petrochemical sector and increased market penetration in Latin America, notably Brazil.
Performance
The division delivered a solid performance in 2009 in difficult market conditions. Revenue was down 9.0 per cent after adjusting for foreign exchange movements. Operating profit reduced by £3 million due to lower revenues. In addition, 2008 operating profit for the Mexican business benefited from a foreign exchange gain, which arose from a strengthening of the US dollar. The successful completion of a gas turbine refurbishment project in Kazakhstan, coupled with the ongoing supply of secure power systems to a number of UK hospitals, helped underpin performance. The Mexican operation benefited from new contracts in the domestic oil exploration and power utilities sector.
Outlook
Developed markets are expected to remain challenging during 2010 although there has been an increase in activity for larger secure power projects since the beginning of the year. There is ongoing demand in developing economies, particularly in Latin America, as demand for power continues to outstrip investment in generation and distribution infrastructure. Demand from the Middle East remains subdued.
