Hydrodec (HYR) may be pushing ahead with its "clear, focused and comprehensive" growth strategy, but it has also become clear that the oil re-refiner and recycler is a magnet for bad news. First-half UK sales suffered from both the sliding oil price and weak production as a result of the re-location of its Australian plant and a slower than expected rebuild and expansion of the Canton operation.
Hydrodec's acquisition of Eco-Oil in April helped it grow overall production and raise sales volumes by 30 per cent to 33.2m litres. However, recycled oil is still affected by global oil prices: the average selling price per litre fell by a whopping 38 per cent to 33¢ (21.6p) compared with last year. Pricing pressure was less severe in the re-refining business, though re-commissioning costs and the protracted construction process weighed on the income statement, resulting in a $0.36m (£0.24m) cash loss in the period.
Operational losses and capital expenditure of $10.9m resulted in a $12.6m cash outflow in the period, leaving Hydrodec with just $2.4m in cash on the balance sheet at the end of June. And although the company should receive $1.7m from partner G&S by the end of the year, current trade and other payables now exceed current assets.
Broker Peel Hunt is forecasting an adjusted loss per share of 1.4¢ in the year to December, from an 8¢ loss in 2014.
HYDRODEC (HYR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 7.1p | MARKET VALUE: | £53.2m | |
| TOUCH: | 7-7.25p | 12-MONTH HIGH: | 10.9p | LOW: 5.8p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 6.5¢* | NET DEBT: | 15% | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 29.4 | -3.2 | -0.41 | nil |
| 2015 | 21.3 | -7.6 | -1.06 | nil |
| % change | -27 | - | - | - |
Ex-div: na Payment: na £1=$1.53 *Includes intangible assets of $20.4m, or 2.7¢ a share | ||||
