Amiad Water Systems' first half profit plummets on low sales

Water treatment and filter producer Amiad Water Systems’ half year profit more than halved due to a fall in sales as it was affected by the prolonged downturn in oil prices.

Pre-tax profit plummeted 51.4% to $1.7m for the six months ended 30 June, compared to the same period last year, and operating profit also fell by 51.2% to £1.9m.

Revenue was down 11.4% to $52.4m and the gross margin narrowed slightly to 39.2% from 40.1% last year.

Diluted earnings per share of fell to 0.049 cents from 0.065 cents.

Net debt at 30 June narrowed by about 43% to $10.4m from last year, and cash and equivalents was $16.2m, down from $17m.

The AIM-listed company said progress was made by Amiad Europe as sales increased by over 10%, including a contribution from the industrial and municipal segments from the newly set up UK subsidiary.

Sales for the irrigation segment, which accounted for 57.9% of revenue, were broadly level as it continued to perform well in Australia and in Europe, Middle East and Africa, and were supported by sales of Amiad's Omega and Sigma products.

Industrial segment sales fell about 6% to $17.5m, due to weak sales in Asia.

Sales in the oil and gas segment were down significantly by about 64% to $1.7m due to a lack of projects because of the current low oil price.

The company said the municipal segment continued to suffer from a lack of investment in major infrastructure projects by local authorities as revenue declined by about 42% to $2.8m, but said the segment is showing signs of recovery.

Since the end of May, the company has won projects in Singapore and Israel and four in Africa totalling $5m.

Chief executive Arik Dayan said: "During the period, the company consolidated the progress made in 2015 and continued to maintain tight control over costs. The irrigation segment was, again, the main contributor to revenue resulting from increased sales of new products in Australia and Europe, Middle East and Africa.

"As expected, however, the oil and gas segment saw a reduction in projects, due to the effect on the industry from the continuing low oil price environment, and the company also received significantly lower revenues from China and Turkey in the first half of 2016 compared with the same period last year due to a decline in the Industrial segment.

"The first half finished with greater interest in our products as new contracts were signed and the momentum continued into the second half of the year with increased backlog as of July 2016. Irrigation will continue to be the largest contributor to the revenues, oil and gas will be lower as expected and the municipal segment is showing signs of recovery in Asia and Europe.”

Shares in Amiad Water Systems were down 3.63% to 142.15p at 1138 BST.