2nd Sep 2014 08:07
LONDON (Alliance News) - Hydro International PLC Tuesday said it expects profit for the full-year 2014 to be broadly similar to 2013, as it continues to be hurt by challenges faced by its wastewater business in the UK and Europe.
The company, which offers products for the control of stormwater and treatment of wastewater, posted pretax profit of GBP19,000 for the six months ended June 30, down from GBP409,000 a year earlier, as revenue fell to GBP13.1 million from GBP15.1 million.
Hydro said its results were down on 2013 as anticipated, and it remains heavily second half weighted. It said solid growth in the Europe stormwater and International divisions partly mitigated the effect on the first half-year results of the anticipated reduction in revenues from the Europe wastewater division. Hydro's Europe stormwater and wasterwater divisions include the UK.
The company said its Americas wastewaster division continues to perform strongly despite revenue falling to GBP5.0 million from GBP5.3 million a year earlier. Meanwhile, the Americas stormwater division held steady with revenue unchanged at GBP2.0 million.
However, Europe wastewater revenue and profit fell reflecting the impact of poor order intake during 2013 and the the conclusion, early in the period, of the three major Zickert Scraper contracts awarded by Thames Water in 2010 and 2011.
Zickert Scrapers aim to remove sludge from water tanks.
Hydro said order intake has continued to present a challenge during the first half of 2014, although a degree of improvement is expected in the second half-year. Moreover, GBP1.3 million of orders were received in July, including a GBP900,000 contract for the supply of equipment to a major wastewater treatment site in Southern England.
"Anticipating the timing of projects remains difficult as the UK water companies prepare for the next asset management programme which commences in April 2015," the company said.
On a more positive note, Europe stormwater revenue rose to GBP2.7 million from GBP2.1 million, which was attributed to the ongoing programme of sales distribution arrangements, covering an increasing proportion of the UK merchant market.
Looking ahead, the company said it has continued to invest in systems, business processes and high-quality personnel to provide a "strong and sustainable" platform for growth.
However it said: "The financial impact of this investment programme on the current year, and the challenges facing the Europe wastewater business following the conclusion of the three major contracts with Thames Water and poor order intake during 2013, is unlikely to be made up by profits generated from the further expected growth in the group's other businesses."
As a result it believes both revenue and profitability in 2014 will be broadly similar to 2013 levels, and that its results for the full-year will again be weighted significantly to the second half.
Nonetheless, the company remains encouraged by its order book.
In line with its current policy, no interim dividend was proposed.
The stock was quoted down 2.8% at 104.50 pence Tuesday morning.
By Anthony Tshibangu; [email protected]; @AnthonyAllNews
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