Company news: Wellstream FY profit misses expectations

The news sent the share price tumbling 12.50 pence to 514.50 by 8:27am.

The oil services group, which makes 'bespoke' flexible pipe solutions for offshore oil companies posted a pretax profit of only 42.8 million compared to 77.5 million in 2008.

Revenue however hit a record high of 400.7 million, compared with 369.9 million reported last year.

The result was due to a loss in operating margins pressured by market reaction to falling oil prices at the end of 2008.

As oil companies cut costs and tried to remain competitive, so Wellstream profits were decreased.

However, despite the tough year, acting CEO, Alasdair MacDonald believes the group has achieved; highlighting the TUPI project for its biggest customer Petrobas, along with the leasing of further land in Brazil - hinting at further output gains at its Niteroi factory.

Analysts at Citigroup and UBS commenting on results reported earlier this year - downgraded the stock to a sell.

"Uncertain demand outside Brazil exposes 2010 earnings," said Kenan Najafov, analyst at Citigroup. He also reckons it is unlikely the company, which has recently been tipped as a takeover target, will receive a bid in the near term.

UBS analyst Alex Brooks added that the first-half results were "in our view a profit warning", adding that although the shares have fallen, there was "further to go". Investors hoping that the company is taken out will also be disappointed, as UBS said, "we believe none of its direct competitors is a likely buyer".