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Iofina nose-dives

Shares in iodine producer Iofina have plummeted over 40 per cent after the company announced bad news on two fronts
December 18, 2013

Iofina (IOF), the specialist iodine producer with a proprietary technology to extract iodine from oil and gas wastewater, saw its share price nose-dive by more than 40 per cent this week after announcing bad news on two fronts.

IC TIP: Sell at 95p

Iofina reported profits and revenues for the year are expected to be significantly below expectations due to falling iodine prices and delayed sales. Broker Investec cut its full-year revenue forecast to $18m (£11m) from $30.9m - meaning that despite significantly higher iodine production, group sales will be lower than last year's $18.6m. Investec’s analysts said this was mostly a "timing effect", as Iofina is building a stockpile of iodine and had to delay shipments of iodine chemicals into early 2014. As a result, the company is likely to remain loss-making at the cash level in 2013, broadly unchanged year-on-year at negative $1m, and down from prior expectations of a profit of $3.3m. Perhaps worse, Iofina said it only planned to build three further plants in 2014 (excluding the two currently under construction), down from previous expectations of six.

Further bad news came when the company said its water rights application in Montana - for a non-core water distribution project, albeit one with significant blue-sky potential - has been preliminarily denied by the Water Rights Bureau. Iofina plans to respond to the draft rejection notice within 15 days.