Shares in Hydro International plunged by a fifth earlier today after the water technology firm warned of lower first-half financial results.
The shares rallied following its annual general meeting at lunchtime and were 12.5% lower by mid-afternoon. The Clevedon company, which has developed a range of technologies to control urban run off, treat stormwater, combined sewage overflows and municipal wastewater, said its first-half performance will be lower than the record performance set in 2011 – with its full-year results significantly weighted towards the second half of the year.
The company says the trading environment remained challenging through the early part of 2012 resulting in delays to the timing of some projects. However, new enquiry levels remain buoyant and “although much still needs to be done the pipeline of potential opportunities is strong”.
Its UK Wastewater business has seen an increase in activity following the difficulties experienced with project flow during 2011. In addition to the ongoing delivery of major sludge scraper contracts for Thames Water, the division has secured a number of key contracts from water companies under the AMP5 asset management programme. These are expected to drive overall growth in divisional revenues in 2012.
Although there are signs of increased pressure on projects from public sector spending restrictions in the US Wastewater business, trading is generally tracking at a stable level.
UK trading in its stormwater business is closely aligned to new-build construction activity and the company says this is showing signs of stepping back as both public and private sector investment levels are being impacted. However, the division has been progressing a number of key initiatives during the first quarter, including the market launch of the Hydro-Brake Optimum flow control and the establishment of Hydro Consultancy.
The US Stormwater team is focused on developing the relationship with Hydro's master distribution partners, ADS and ACF. This is providing continuing encouragement, and although new orders have been relatively slow to materialise, high enquiry levels are being generated and confidence is growing.
Internationally, the division has continued to build on the success achieved in 2011 on key stormwater pollution and emerging flood control projects in Malaysia. Hydro says the group is now looking to reinforce its developing position in key markets by deploying regional resources to better support our network of distribution partners.
The shares, which peaked at 154p on April 13, started the day at 113p, down 19.29%. After the AGM, they recovered to 122.5p, down 17.5p or 12.5% at 2.30pm.
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