LONDON (ShareCast) - Heat exchangers group Turbotec gained a quarter of its value Monday following "solid" full-year results and on hopes that new US legislation will prove lucrative for the UK firm.
Profit before tax for the year ended
31 March 2009 dropped to $1.42m from $1.92m in 2008 on revenue down to $26.99m from $28.02m. Revenue for the first nine months hit $22m, but weak credit markets and falling commodity prices depressed demand in the fourth quarter.
There were also one-off legal costs of about $250,000 linked to a dispute with majority shareholder, Thermodynetics (TDYT.OB - news) , while another $250,000 was used to set up a new manufacturing facility in Hickory, USA.
The company, which warned in March that earnings would be below market expectations, said gross profit rose 2.2% to $7.51m. The £3m business saw net current assets increase by $0.9m to $5.2m.
But managing director Sunil Raina thinks investors should be excited about a new law, passed by the Obama administration, incentivising individuals and companies to install energy efficient geothermal heat pumps.
An average pump, which uses Turbotec's Turbo-Flow coaxial coils, will cost about $25,000 to install, but lawmakers have approved a 30% tax credit to make them more financially attractive.
"We are excited about the potential opportunities for our products with the significant incentives now available for the purchase of geothermal heat pumps for both residential and commercial installations in the US," Raina said.
"We remain cautiously optimistic about our long term prospects given the continued uncertainty over global energy supply, increasing awareness of climate change and the drive towards practical, energy saving solutions with a lower carbon footprint."
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