Investment in the development of its oil and gas wellhead sealing technology will mean Plexus Holdings (LON:POS) missing earnings expectations this year.
Revenues are on track with enquiries for its POS-Grip technology rising, but costs of promoting the technology and the heavier investment have affected margins. Underlying profits [EBITDA] and losses before tax will therefore not meet previous forecasts, said the company.
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Plexus sold its wellhead exploration and equipment services business to TechnipFMC for £14mln upfront and up to a further £27.5mln a year ago.
That left it with cash in the bank although with the recent KMS and share buyback this will be lower than previously anticipated.
Plexus added it switching its focus towards the gas market as part of its plan to establish POS-GRIP technology as a new industry standard for wellhead and metal-to-metal sealing designs.
Ben Van Bilderbeek said: "We believe that the company's short-term financial performance should not be seen as the key indicator, with the critical strategic goal being the continued and growing interest in Plexus' POS-GRIP technology.
“The difference between market expectations and the likely reported full-year numbers is in part due to investments that we have and will be making over the course of the period in support of the growth strategy
“The TFMC transaction has ensured that we have the capital and time to re-invent our business, particularly in respect of surface production wellhead opportunities.
“Our overall objective therefore is to establish our 'gas proof' POS-GRIP equipment as an enabling technology for the wider energy industry.
“[With] increasing calls for the energy industry to tackle gas and in particular methane leaks, this is an exciting period for Plexus."