HydroDec Group plc Trading Update (6713E)
July 20 2016 - 1:00AM
UK Regulatory
TIDMHYR
RNS Number : 6713E
HydroDec Group plc
20 July 2016
20 July 2016
Hydrodec Group plc
("Hydrodec", the "Company" or the "Group")
Trading Update
Hydrodec Group plc (AIM: HYR), the cleantech industrial oil
re-refining group is pleased to provide a trading update in respect
of the six month period ended 30 June 2016.
Highlights
-- Increased Group sales volumes of premium quality SUPERFINE
transformer oil and base oil in H1 of 16.75 million litres (H1
2015: 1.7 million litres), reflecting full commissioning of new
Canton plant at the end of 2015 - record monthly sales in June of
3.2m litres
-- Improving plant utilisation - Canton reaching 76% in May
-- Continued successful production in Australia and improving feedstock position
-- Revenues from continuing core re-refining business for H1
2016 expected to increase by approximately 130% to US$7.6 million
(H1 2015: US$3.3 million)
-- H1 2016 gross unit margins in continuing business higher than
H1 2015 despite lower product sales prices and challenging market
conditions
-- Disposal of loss-making UK recycling operations in March
Update
The Board is pleased to report significant progress in
delivering the Company's key objectives since the beginning of the
year.
The main drivers in 2016 have been to refocus on the core
transformer oil re-refining technology by optimising the
performance of the Canton facility, and to increase production
levels through a combination of leveraging the experience gained
since fully commissioning the plant at the end of last year along
with specific targeted operating improvements. These improvements
have been validated by the significantly lower number of production
hours lost through unscheduled stoppages and the record monthly
production performance of the plant in May of 2.82 million litres
of SUPERFINE transformer oil and base oil.
An additional primary objective relates to improving the sales
mix between higher margin transformer oil and lower margin base oil
produced at the Canton plant. At the beginning of the year, January
transformer oil sales represented 19% of US volumes sold. Since
then significant improvements have been made in this area and in
June transformer oil represented 71% of sales, with further
advances expected.
In respect of the operations in Australia, since the
commissioning of the plant at the Southern Oil Refinery in May 2015
we have had to work extremely hard to re-establish our commercial
position in the market. I am pleased to report that in May, the
Australian business enjoyed one of its highest feedstock
acquisition months since 2012 and the underlying pipeline continues
to grow steadily.
Finally, there has been a key focus on the reduction of
corporate costs. Significant reductions have already been realised
with the expectation that the benefits from more recently
implemented initiatives will filter through in H2.
Given that the Group's key operations are in the US and
Australia, the Board does not expect there to be any material
impact on the Group's performance as a result of the Brexit
referendum.
Outlook
In summary, the information provided today confirms 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 whilst continuing the
program of cost reduction. We continue to make strong progress
towards positive Group EBITDA in the second half of the year.
Chris Ellis, Chief Executive Officer of Hydrodec, commented: "I
am pleased to be able to report significant progress in moving
Hydrodec towards profitability and expanding its position in the
transformer oil market in our key operating arenas. 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."
For further information please contact:
020 3300
Hydrodec Group plc 1643
Chris Ellis, Chief Executive
Mike Preen, Company Secretary
Canaccord Genuity (Nominated 020 7418
Adviser and Broker) 8900
Guy Marks
Henry Fitgerald-O'Connor
Vigo Communications (PR 020 7016
adviser to Hydrodec) 9570
Patrick d'Ancona
Chris McMahon
Notes to Editors:
Hydrodec's technology is a proven, highly efficient, oil
re-refining and chemical process initially targeted at the
multi-billion US$ market for transformer oil used by the world's
electricity industry. MarketsandMarkets forecasts that the global
transformer oil market is expected to grow from US$1.98 billion in
2015 to US$2.79 billion by 2020 at a CAGR of 7.14% from 2015 to
2020. Spent oil is currently processed at two commercial plants
with distinct competitive advantage delivered through very high
recoveries (near 100%), producing 'as new' high quality oils at
competitive cost and without environmentally harmful emissions. The
process also completely eliminates PCBs, a toxic additive banned
under international regulations. Hydrodec's plants are located at
Canton, Ohio, US and Bomen, New South Wales, Australia.
Hydrodec's shares are listed on the AIM Market of the London
Stock Exchange. For further information, please visit
www.hydrodec.com.
This information is provided by RNS
The company news service from the London Stock Exchange
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