LONDON (Alliance News) - HydroDec Group PLC Wednesday said its pretax loss widened in the first half of 2015 after "short term issues" and lower oil prices hit revenue and earnings, but said its six-point plan is progressing well to return the company to profitability.
HydroDec shares were down 9.5% to 6.90 pence per share on Wednesday morning.
The oil and chemical technology provider reported a USD7.6 million pretax loss in the first six months of 2015, widening from the USD3.1 million loss a year earlier as revenue dropped to USD19.8 million from USD25.4 million.
That produced a USD2.8 million gross profit compared to a USD7.9 million profit and loss before interest, tax, depreciation and amortisation of USD3.2 million compared to earnings of USD1.6 million.
Revenue and earnings were hit by "short term issues" including the lost production during re-location of operations in Australia, the delay in delivering its key projects and because its UK operations were negatively impacted by lower oil prices.
Sales in the half rose to 33.2 million litres of refined oil products from only 25.5 million litres, which was boosted by the acquisition of Eco Oil Ltd in April.
Gong forward, the company said the ramp up to full production in the US has been slower than expected from its rebuilt and expanded plant in Ohio, but said the plant is "well placed" to produce the "highest quality transformer oil produced in the US" in 2016.
In the UK, lower oil prices have created a significant market dislocation in supply and demand for used oil and used oil products.
"Hydrodec UK has responded, and continues to react to, and operate in, a tough trading environment, with a second phase of restructuring underway. The security of feedstock supply delivered by the combined business underpins the rationale and longer term strategy for a UK re-refinery where base oil margins are less volatile and continue to trade at a significant premium to fuel oil," it said.
Earlier in 2015 at the company;s annual general meeting, it laid out a six-point plan to get the company creating value for shareholders. That plan consists of delivering the US plant; embedding the outsourcing relationship with Southern Oil in Australia; delivering a leading waste management business in the UK; building a technology platform through patents and partnerships; building out the lubricant and oil re-refining market and creating growth by de-risking technology through partnerships and integration in the value chain.
"The key elements of this comprehensive strategy are in place; the board and management all believe that delivery of this strategy and plan will drive the company to profitability," said HydroDec.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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