(Alliance News) - Amiad Water Systems Ltd on Thursday reported a sharp decline in profit for 2019, quoting higher expenses, currency fluctuations and a shift in sales mix.
The stock was untraded on Thursday afternoon in London, last quoted at 218.00 pence each.
The water filtration business posted pretax profit of USD100,000 on revenue of GBP115.6 million. For comparison, in 2018 pretax profit stood at USD4.8 million on revenue GBP113.9 million. No dividend was declared.
Gross margin fell 39% from 42%, attributed to the strengthening of the New Israeli Shekel against the US dollar which resulted in increased cost of sales in Israel, as well as the sales erosion due to the strength of the US dollar against the Australian dollar and the Euro.
Amiad said that administrative and general expenses were higher at USD9.8 million from USD9.5 million. Financial expenses of USD2.3 million were recorded on the adoption of IFRS 16.
Looking ahead, the Israel-based company said sales in 2020 so far have been greater than the same period in 2019, but warned that the Covid-19 outbreak has the potential to hurt the currency markets and trade.
It said it expects savings of USD4.6 million from cost-saving measures implemented at the end of 2019, which will be almost fully realised in 2020. It added that expects to benefit from its potential investment from shareholder FIMI Opportunity Funds.
In February, Amiad entered into a conditional agreement with FIMI for an investment of up to GBP17.6 million through share subscription by FIMI and an open offer.
"Looking ahead, we entered 2020 with a higher backlog than at the same point in the prior year and expect growth for both the Irrigation and Industrial business units. However, we're keeping under review the extent of potential disruption to trade caused by the COVID-19 outbreak as well as the impact of the currency markets," said Chief Executive Dori Ivzori.
"Meanwhile, Amiad stands to be well capitalised following the substantive investment from our shareholder, FIMI, and we are taking steps to ensure we are well-positioned for sustained profitable growth when normal business resumes. Consequently, the board is confident in our business and looks to the future with optimism," he added
Cash at the end of the period stood at USD15.0 million, with net debt of USD12.5 million.
By Ife Taiwo; ifetaiwo@alliancenews.com
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