Trading update and outlook

RNS Number : 0881C

Gas Turbine Efficiency PLC

01 March 2011

 



1 March 2011             

Gas Turbine Efficiency plc

Trading update and outlook

Gas Turbine Efficiency plc ("GTE", the "Group", or the "Company"), a leading provider of proprietary cleantech systems for enhancing the performance of industrial gas turbines, is pleased to announce a trading update and outlook.

Trading Update

Further to the announcement made on 29 December 2010, the Company confirms that:

·      Group sales for the year to 31 December 2010 were up by 4.3% at US$38.7 million (2009: US$37.1 million).  Increased sales of Combustion parts and services in 2010 (which included a full year of turbine service activity, compared with a part year in 2009) were offset by a decline in sales of Auxiliaries, reflecting continued spending constraints among customers. Aviation sales were relatively flat year on year at US$5.5 million.

·    Although subject to audit, the Group expects to have made a substantial loss in the year to 31 December 2010.  While underlying gross margins remained strong, a number of exceptional and non-recurring costs, combined with a high fixed cost base, adversely affected results for the year.

·      As of 28 February 2011, total sales for the first two months plus backlog for delivery in 2011 were US$17.2 million, some 35% higher than at the same date in 2010. 

Outlook

With the sale of its aviation business completed in January of this year, GTE sees sales strengthening in 2011/2012 across its core businesses - the Industrial Business Unit's auxiliary products and the Industrial Gas Turbine division's combustion products.  Growth in these core activities is expected to more than offset the loss of revenues resulting from the sale of aviation and, as announced on 29 December 2010, the loss of the outage service team. Aftermarket repairs and upgrades are expected to continue to grow, and demand to build for the Ecomax energy saving technology, as the economy recovers and energy prices continue to rise.

With several new combustion upgrade products now launched, longer term service agreements recently signed with leading independent power producers in the US and GTE continuing to expand and diversify its market base, the Board is confident about prospects for sales growth in 2011.

Specifically:

·    Industrial Business Unit sales are expected to grow nearly 50%, from US$19.9 million to approximately US$30 million, driven by post-recession new unit recovery, higher oil and gas prices driving infrastructure investment, customer diversification initiatives, and a strong water-wash quote pipeline.  The Industrial Business Unit has US$13.3 million of sales backlog in hand, approximately double the year-ago level, with more than 90% of 2011 revenue expected to come from long-standing accounts;

·    Industrial Gas Turbine combustion product sales are expected to grow nearly 40%, from US$7.4 million to over US$10 million (of which US$2.6 million is already in backlog), driven by recently signed longer term repair agreements with leading US customers, newly launched product lines, distribution agreements with global third parties and Ecomax pilot launch programmes at key US customers.  More than 75% of planned revenue is expected to come from existing combustion customers, with the other 25% from current Industrial Business Unit customers, as they expand their purchases into combustion products.

John Grant, Executive Chairman, commented: "After a challenging year in 2010, when we achieved only modest sales growth in a difficult market environment, we are much more confident about sales prospects for 2011.  The significant investment made by GTE over recent years in developing new products is now starting to come to fruition, with strong sales momentum.  Our projected sales growth, together with tight control of costs, should enable GTE to become EBITDA positive by 2012."

For further information:

Gas Turbine Efficiency plc

John Grant (Executive Chairman)

[phone]

Steven Zwolinski (Chief Executive Officer)

[phone]

 
Matrix Corporate Capital LLP
Nick Ellis / Stephen Mischler
 [phone]
 
Financial Dynamics
Nina Delangle
[phone]

This press release contains forward-looking statements and information - that is, statements related to future, not past, events. These statements may be identified by words such as "expects," "looks forward to," "anticipates," "intends," "plans," "believes," "seeks," "estimates," "will," "project" or words of similar meaning. Such statements are based on the current expectations and certain assumptions of GTE's management, and are, therefore, subject to certain risks and uncertainties. A variety of factors, many of which are beyond GTE's control, affect GTE's operations, performance, business strategy and results and could cause the actual results, performance or achievements of GTE to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements. These may negatively impact our revenue development.

 

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