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Financial Times: Cape capitalises on safety concerns

By Alistair Gray
Published: January 5 2008 03:49 | Last updated: January 5 2008 03:49

The BP oil spill in Alaska has allowed companies that provide support services for the sector to capitalise on safety concerns, Cape’s chief executive said on Friday after the company upgraded its outlook for the year.

Cape, which does much of its cleaning, maintenance and equipment rental for the oil and gas sectors, said its results for the year would beat analyst forecasts.

High energy prices helped sales in every region – the UK, the Gulf, Russia and the Far East – perform “well ahead of expectations”, the company said, as its customers spent more on investment and maintenance.

Its decision to make acquisitions in commodity-rich Australia was a “no-brainer”, said Martin May, chief executive. Synergies from the three purchases made during the year, which have a combined annual turnover of £125m ($246m), had been greater than expected.

Mr May said Cape, whose clients include BP and Shell, had benefited as oil companies sought to improve their safety record. “The question that was raised was: is BP spending enough on maintenance? That creates a revenue stream for us.”

Cape had no plans to expand into developing markets. “They don’t buy safety in China and India.”

Francesca Raleigh, analyst at Numis, said: “Health and safety creates a barrier to entry … and they’re operating in a buoyant market.”

She upgraded her earning per shares forecast by 10 per cent. Cape, which releases its results on March 19, had been expected to announce pre-tax profit of £29.4m.

Cape shares rose 11p to 243½p.

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