Hydrodec's first half revenue rises due to new US plant

For the six months ended 30 June, revenues from the continuing core re-refining business increased by 148% to $8.1m, compared to the same period last year, due the company commissioning a new plant in Canton, Ohio at the end of 2015 and increased market penetration.

Gross unit margins in continuing business were higher than last, despite lower product sale prices and challenging market conditions.

The AIM listed company is continuing to cut costs and during the period costs fell 29% to $1.5m.

The loss on group earnings before interest, tax, depreciation and amortisation (EBITDA) from continuing operations narrowed by 68% to $1.1m, and the company expects to move to a positive EBITDA in the second half of the year.

The overall loss for the period narrowed by 37% to $5.3m.

Operating cash outflow was reduced by 65.5% to $2m.

Sales volumes of premium quality Superfine, a transformer and base oil, soared to 16.75m litres from 1.7m litres last year. In June there were record sales of 3.2m litres.

The company was improving utilisation as the Canton plant reached 76% in May it said it had improved efficiency in the plant in Bomen, Australia.

The Superfine transformer oil achieved ‘500 hour’ oil status in the US, to certify that it is a high quality transformer oil, which is a prerequisite to access the larger power transformer market.

Chief executive Chris Ellis, said: “Today's results confirm significant progress in the turnaround of the company over the first half of the year. Our key objective during the rest of the year is to strengthen margins as we grow market share and seek to leverage the recent carbon credit approval in the US, whilst continuing the program of cost reduction.”

He added that volumes and margins in the third quarter to date remain consistent with the second quarter and, with both operations now generating positive EBITDA, the company continues to make strong progress towards positive EBITDA in the second half of the year.

Shares in Hydrodec were down 10.67% to 2.68p at 1157 BST.