Investors mark oil re-refining specialist Hydrodec (HYR:AIM) up 12.3% to 3.85p as a trading update reveals it has made considerable progress with a turnaround plan instituted at the start of 2016.

Under former finance director Chris Ellis, who took over as chief executive in December 2015, the company has re-focused on its core business which involves refining used transformer oil into its patented SUPERFINE oil. Ellis says there has been ‘significant progress in moving Hydrodec towards profitability’.

The company has plugging away at this for 15 years without making a profit. It has two facilities:  one in Canton, Ohio and the other in Bomen, New South Wales, Australia. In 2013 it took a big hit when a fire and explosion at the Canton plant caused $12.5 million worth of damage.

The company revamped the operation at Canton in 2015 and utilisation reached 76% in May. This resulted in an increase in sales volumes from 1.7 million litres in the first half of 2015 to 16.75 million litres in the first half of 2016 with record monthly sales in June of 3.2 million litres.

Revenue from this core activity is expected to increase 130% year-on-year to $7.6 million. The company disposed of its UK recycling operations in March.

Despite a tough backdrop the company hopes to strengthen its margins as it grows market share and continues to reduce costs. In its outlook statement, the company says it continues ‘to make strong progress towards positive Group EBITDA in the second half of the year’.

Issue Date: 20 Jul 2016