Tekmar Group Plc (LON:TGP), a leading provider of engineering solutions and technology for the offshore energy market, is showing strong signs of recovery after navigating challenging market conditions. The company’s focused strategy and improving end markets present an optimistic outlook, according to Cavendish Capital Markets’ research.
A Clear Path to Growth
Tekmar has been at the forefront of offshore energy for nearly 40 years, offering subsea protection systems and engineering solutions to the global offshore wind, energy, interconnector, and telecommunications markets. Following a difficult trading period marked by cost inflation and supply chain disruptions, the company is now poised for a turnaround, supported by a robust three-year strategy unveiled on 2 December 2024.
As highlighted in the research note, Tekmar expects to deliver revenue of approximately £32 million for FY24, alongside adjusted EBITDA of £1.8 million—the company’s highest profitability level since FY20. The company’s gross margin has also seen a notable improvement to over 30%, reflecting better cost management and operational efficiency.
Strong Market Position and Strategy
The company operates across two key sectors: offshore wind and oil & gas. Its cutting-edge subsea protection technologies have supported over 40GW of global offshore wind capacity and feature prominently in significant projects like the Dogger Bank wind farm. Tekmar also boasts a stellar client list, including Equinor, BP, Shell, and Orsted, underscoring its reputation as a trusted partner in the energy sector.
Ian McInally, Director of Research at Cavendish, commented on Tekmar’s strategic efforts, saying, “The group’s focused three-year strategy is set to deliver a fundamental change in scale and quality of revenue, aiming for significant profitability gains through operational gearing and targeted growth initiatives.”
New Leadership Driving Change
Tekmar Group’s new CEO, Richard Turner, who assumed the role in September 2024, brings extensive experience in the offshore energy sector. Under his leadership, the company aims to grow its order book, expand engineering service offerings, and pursue strategic acquisitions supported by an £18 million convertible loan facility provided by SCF Partners.
The company is also emphasising innovation, with plans to invest in advanced engineering solutions, including offshore grouting services and digital cable monitoring technology. This commitment to innovation ensures Tekmar remains competitive in the fast-evolving offshore energy market.
In Summary
With a clear recovery plan, strong client relationships, and a proven industry pedigree, Tekmar Group is well-positioned for long-term success. The company’s growth strategy and commitment to innovation could drive significant value for stakeholders. Cavendish has set a target price of 20p for Tekmar’s shares, representing a 167% upside from current levels.
As Tekmar focuses on delivering its ambitious three-year plan, its journey from recovery to sustained growth is one to watch.
