HydroDec Group plc Pre-close Trading Update (4157V)
January 30 2017 - 1:01AM
UK Regulatory
TIDMHYR
RNS Number : 4157V
HydroDec Group plc
30 January 2017
30 January 2017
Hydrodec Group plc
("Hydrodec", the "Company" or the "Group")
Pre-close Trading Update
Hydrodec Group plc (AIM: HYR), the cleantech industrial oil
re-refining group, is pleased to provide a trading update for the
financial year ended 31 December 2016.
Unuadited highlights for year ended 31 December 2016
-- Revenues from continuing core re-refining business expected
to increase by approximately 100% to US$16.4 million (2015: US$8.2
million), reflecting the full recommissioning of the Canton plant
at the end of 2015
-- Increased Group sales volumes of premium quality SUPERFINE
transformer oil and base oil for the year of 33.3 million litres
(2015: 14.4 million litres), up 130%
-- Continued improvement of plant operability, with an average
utilisation rate of 73% achieved for the year, further validated by
significantly lower number of production hours lost through
unscheduled stoppages
-- Gross unit margins higher than 2015, despite lower product
sales prices and challenging market conditions
-- Improved sales mix between higher margin transformer oil and
lower margin base oil, with transformer oil sales representing 57%
of total Group oil sales in 2016, up from 7% in 2015
-- Significant reduction in corporate costs already realised
with benefits from more recently implemented initiatives continuing
to filter through into 2017
-- Group EBITDA loss from continuing operations significantly
reduced in the year and expected to be marginally above market
expectations. Group EBITDA expected to be positive for Q4 2016,
despite the usual seasonal trends, providing the Company with
confidence that this trend towards positive EBITDA at Group level
will continue in 2017
-- Carbon credit approval enabling Hydrodec's product to be sold
with a carbon offset and creating a future incremental revenue
stream
-- SUPERFINE transformer oil in the US achieved "500 hour" quality status
-- Additional investment by G&S Technologies Group in Hydrodec of North America in October 2016
-- Disposal of loss-making UK recycling operations in March 2016
Outlook
This update confirms significant progress in the turnaround of
the Company over the past twelve months. Whilst the general
operating environment for oil related businesses has improved
recently, positively impacting the Group's pricing and margins,
challenges still remain. 2017 has begun strongly in terms of sales
orders in the US and Australia. Whilst the Australian feedstock
position remains robust, the feedstock position in the US is
tighter. Higher margin transformer oil sales currently represent c.
60% of total Group oil sales, with scope for further improvement
through the year.
In 2017, the Group remains focused on continued progress from
its positive Q4 2016 performance, which will be driven by
strengthening margins as the Group continues to grow market share
and deliver further cost reductions and efficiencies where
appropriate. This should enable Hydrodec to deliver positive Group
EBITDA for 2017 as a whole.
Chris Ellis, Chief Executive Officer of Hydrodec, commented: "I
am pleased to report a move into positive Group EBITDA in the last
quarter of 2016, as much of our recent hard work begins to pay
dividends in terms of Canton's strong operational performance, our
increasing penetration of the transformer oil market, and the
impact of cost cutting measures over central corporate expenditure.
Despite continuing challenges in a still volatile market, I am
confident that 2017 will see a move for the Group towards full year
positive EBITDA and look forward to reporting further
progress."
For further information, please contact:
Hydrodec Group plc 01372 824750
Chris Ellis, Chief Executive
Canaccord Genuity (Nominated
Adviser and Broker) 020 7523 8000
Henry Fitzgerald-O'Connor
Richard Andrews
Vigo Communications (PR adviser
to Hydrodec) 020 7830 9700
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.
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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