WOOLLARD & Henry has suffered a 50 per cent fall in profits as the downturn in the oil and gas sector weighed on the firm but has won more business in the paper-making sector amid challenging conditions.

The Aberdeen-based firm, which makes the Dandy Rolls used to watermark bank notes, saw pre-tax profits fall to £182,814 in the year to 31 March from £403,228 as sales fell at its oil and gas engineering arm.

Managing director Fred Bowden noted employee-owned Woollard & Henry opened a new oil and gas engineering facility in March last year, three months before the crude price stared to tumble.

The firm has applied its engineering skills making products such as personnel transfer systems used on offshore oil and gas installations for some time. It opened the new facility in the expectation of winning sub-contract engineering work.

However, the market turned against it as North Sea oil and gas firms cut spending in response to the fall in the Brent crude price.

“It was a lot tougher than we were expecting,” noted Mr Bowden. He said Woollard & Henry is braced for conditions to remain challenging for some time in the oil and gas sector. This accounts for around half of Woollard & Henry’s business.

However, Mr Bowden said Woollard & Henry is in good shape to cope with the North Sea downturn. The 140-year old company has a strong balance sheet. It has been achieving growth in the paper-making industry, which has been in upheaval in the UK.

The collapse of Fife-based Tullis Russell into administration in April, with the loss of around 350 jobs, underlined how tough conditions are in the sector. Also employee-owned, Tullis Russell was a customer of Woollard & Henry, but not a major one.

However, Mr Bowden said Woollard & Henry has been making good progress in export markets such as Poland and China.

Dolly Rolls have been selling well overseas.

The company has been winning orders in Europe for a new product called AccuSteam. This sprays steam on to paper during the production process to increase the quality and efficiency of operations.

It expects to achieve slight growth in turnover in the paper sector in the current year.

Total turnover increased 14 per cent, to £6.5m in the year to March, from £5.7m in the preceding year.

Mr Bowden expects group sales and profits to fall slightly in the current year.

The average monthly number of employees increased to 71 in the year to March, following the opening of the oil and gas facility, from 54 in the preceding year. Recruitment has slowed in the current year.

Woollard & Henry became employee-owned in 2002 following a buyout funded by the Baxi Partnership. This was led by David Erdal, who had transferred Tullis Russell from his family into employee ownership.

Asked whether being employee-owned helps the business, Mr Bowden said: “Yes, definitely. You try to communicate with people so there’s no real shocks. People will do extra as they have an investment in it.”

He said being employee-owned probably allowed Tullis Russell to survive for longer than a firm with a different form of ownership may have done.