Energy Technique

Energy Technique swung into the red in the half to September as the property and construction slowdown caused by the Iraq war produced a dire trading period. Pre-tax profits of £346,000 gave way to a £679,000 loss, with the bulk occurring in the first quarter, which also included £75,000 of redundancy costs. Interim sales fell from £6.3m to £4.95m, though second quarter revenues recovered strongly, dramatically paring back losses. The first three months of the financial year were also affected by a sudden downturn in the air conditioning market. Sales of the group's core fan coil and commercial heating products were hit by plumetting demand from the hotel and office property sectors, but the second quarter saw a return to profitability as confidence returned. The diffusion refrigeration and distribution arm, which distributes Panasonic and LG Electronics packaged air conditioning equipment returned to form in the second quarter, although it posted an operating loss in the first half as well. In other areas, Energy Technique needs to keep investing in a proposed division to focus on the Nightingale UVGI Air Treatment unit, which it is trying to sell into hospitals. The costs of developing the Nightingale unit, when combined with the first-half losses, ensured gearing leapt to 297%. A stock best avoided for now.

Sector: General Industrials

Companies: Energy Technique

Market cap: £6.94m

PE Forecast: n/a

Share price: 9.5p

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