LONDON (Alliance News) - Shares in Hydrodec Group PLC fell on Wednesday as the company said it had a particularly difficult first quarter compared to usual.
The stock was down 19% at 1.40 pence midday Wednesday in London.
Hydrodec, an industrial oil re-refining company, said sales volumes of its Superfine transformer oil and base lower oil were 5.3 million litres in the three months to March compared to 7.7 million in the same period a year before.
Demand for end-product was still strong, it said, but feedstock supply continues to restrain its ability to produce more product.
Consequently, revenue fell to USD3.5 million for the period from USD4.5 million, with the lower sales offset partly by higher prices.
Hydrodec said during the quarter "significant weather disruption" affected supplies as partner G&S could not fulfil budgeted volumes, while in Australia a large decommissioning contract was pushed from February to the end of the second quarter of this year.
As a result of the delay Hydrodec now expects first quarter earnings before interest, tax, depreciation, and amortisation to be lower than recent quarters.
On a positive note, US margins improved due to an increase in higher margin transformer oil sales which have reached 66% of total sales compared to 53% a year ago. The company expects further margin improvement in 2018.
Hydrodec also said Wednesday it is talking to energy investment banking services firm Simmons & Co as it looks to grow its core US business.
Executive Chairman & Interim Chief Executive Colin Moynihan said: "Hydrodec's business continues to offer significant upside with a strong forward order book in the US; the first material sale of carbon credits and excellent quality production.
"The management team is now focused on the central issue of substantially increasing the availability of competitively priced feedstock which has a direct impact on the performance of the existing operations; a stronger balance sheet and finalisation of the board's review of its various growth options."
Moynihan added: "These include opportunities for internal and organic business growth as well as strategic acquisition opportunities and partnerships if, and only if, they are seen by the Board to add shareholder value."
Moynihan is currently interim CEO following the early April departure of former CEO Chris Ellis, who stepped down with immediate effect due to a family illness. Hydrodec gave no update on Wednesday as to any progress being made on the make-up of its senior team.
