07/05/2008
Water control and treatment products venture Hydro International has cheered investors with an astute acquisition.
The company, which supplies innovative products and systems for controlling and treating storm water and wastewater, has acquired Eutek Systems in a transaction capped at US$13.5m (£6.9m).
Providing equipment that removes grit, sugar sands and abrasives from wastewater streams, Oregon-based Eutek brings a complementary product range to Hydro and, according to chief executive Steve Hides, the deal represents a perfect fit, ‘giving us expanded market share in the US, a West Coast base of operations and product technologies that complement our existing wastewater grit-removal portfolio’.
Analysts say the market for grit-removal systems is expanding on the back of requirements to upgrade and replace ageing equipment, as well as rising demand for more efficient systems to remove grit from wastewater flows.
Accompanying the deal was news of Hydro's winning of a £1.6m contract to supply flow control devices as part of a £50m flood prevention scheme for homes and businesses in Glasgow.
In February, Hydro announced record annual results for 2007, driven by organic growth from its core storm water and wastewater related products. Sales rose by 16% to a shade under £26m, pre-tax profits increased to £2.5m (2006: £1.83m) and cash balances grew by a considerable £2.2m to £4.85m. From earnings of 12.47p (2006: 9.7p), investors were treated to a 22% hike in the dividend to 2.8p.
Delivering profitable growth and with market fundamentals strong, Hydro, trading on a historic earnings multiple of less than 14 times, looks unfairly overlooked.
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