Yesterday, Burckhardt Compression announced that it has encountered execution problems in two types of its recently released compressors. One of these is used in the upstream oil and gas business (onshore) and the other, handles gas in the refineries. The principal source of the problem is external engineering issues, which account for about 80% of the application, and are therefore not directly related to the compressor units themselves.
Given this, the company is envisaging that profits for 2013 will be about 10% lower. Burckhardt has been aiming for a 20% volume increase this year, which is about 15% above the consensus. Order volumes for 2013 are fully secured, and therefore the issue for the company now is to get the deliveries done.
The overall risk appraisal of the company has increased with this incident.