Turbotec turning up the heat

After halved annual profits of $1.2m (£0.8m), US pipe-maker Turbotec Products is hoping for an upturn in the American housing market.

The AIM-quoted company saw turnover slide 27% to $19.8m in the year to March, when managing director Sunil Raina says Turbotec faced ‘a tough market, a tough economy and a depressed housing market’. 

Turbotec, which makes pipes for the refrigeration, swimming pool and water heating industries with a patented technique for twisting metal tubes to make heat transfer more effectively, has begun the process of relocating its manufacturing operations from Connecticut to Hickory, North Carolina, by buying a $5m (£3.3m) 100,000 sq ft facility there. Raina argues, ‘Energy costs in North Carolina are half what we would have to pay in Connecticut.’

Since its year-end, the company, whose products include Pool-Safe chlorine-resistant titanium tubing for swimming pools and Groove-Rite stainless steel tubing for boilers, has seen off a legal challenge from its previous largest shareholder, Thermodynetics. Turbotec has received a £350,000 advance payment of a final award that has yet to be determined and Thermodynetics has cut its 50%-plus stake to 29.77% by selling shares to colourful headhunter Adrian Ezra and entrepreneurial broker Joseph DeSena.

Turbotec has $1.5m in cash and currently owes $2.2m in mortgage payments on the Hickory purchase. The company is seeking to develop its cash-generative manufacturing operations and house broker Evolution Securities sees pre-tax profits edging up to $1.4m this year, with a recovery to $3.2m pre-tax on the cards for 2011-12.

Floated at 85p four years ago, Turbotec shares now trade at 33.5p. Risks and imponderables clearly remain, but strong-nerved investors might consider a punt.