Hydrodec make a comeback in first half

Hydrodec Group, a company which re-refines waste oil have announced record sales numbers for the first half of 2016, following on from their reported loss last year.

The main drivers have been the firm's refocusing on core transformer oil re-refining technology by optimising the performance of its Canton facility.

Sales volumes of premium quality superfine transformer oil and base oil increased by 16.75m litres. The most notable sales were in May 2.82m litres and June at a record number of 3.2m litres.

Revenues from the group’s core re-refining business for the first half were expected to increase by approximately 130% to $7.6m compared to $3.3m last year. Gross unit margins are also higher than the previous year despite lower product sales prices and challenging market conditions.

The increase in sales was attributed to the firm’s increased utilisation of its new Canton plant by 76%.

Improvements have been made to the plant, which have reduced production hours lost through unscheduled stoppages. The firm also disposed on loss making UK recycling operations in March.

Aside from these drivers, another objective was to improve the sales mix between higher margin transformer oil and lower margin base oil. At the beginning of the year, transformer oil sales represented 19% of total sales and since improvements have been made it represented 71% of sales.

In terms of their Australian business, it enjoyed one of its highest feed-stock acquisition months since 2012 in May and its underlying pipeline is growing steadily.

The firm have made significant reductions to corporate costs, the benefits of which the board feel will materialise by the second half of this year.

The Board also does not see Brexit impacting this predicted improvement in performance, as its main operations are based in the US and Australia.

Chief executive of Hydrodec, Chris Ellis, said: "Whilst market conditions remain challenging, we are focused on delivering our operational plans and also primed to take advantage of the opportunities the current market may yet present to grow the business both in our existing areas of focus and in new markets."

Looking forward the firm hopes to continue to increase market share, strengthen margins and further reduce costs.

Hydrodec's share price was up 21.17% at 4.15p on Wednesday at 1415 BST