Electrical machines and power electronics company Turbo Power Systems (AIM, TSX: TPS) reported improvements in its financial performance in the third quarter as revenues rose and net loss narrowed, expecting the business to strengthen as production in its target markets increased.
The company said its production and development income for the quarter amounted to £2.1 million, up from £1.8 million in Q3 2008, while EBITDA (earnings before interest, taxes, depreciation and amortisation) profit was at £0.11 million compared to a loss of £1.52 million in Q3 last year. Net losses for the quarter narrowed to £0.34 from last year’s £1.85 million. The business was negatively impacted by the economic downturn over the past year, as production revenues fell to £4.07 million in the first nine months from last year’s £4.92 million as some of Turbo Power’s industrial customers reduced their demand.
Turbo Power expects its financial performance to improve further as production activity increases in both retail and industrial sectors, also intending to maintain emphasis on cost reduction.
The company reported an order book of £28 million at 30 September. The post-period development and manufacturing agreement with the world’s second-largest air conditioning, heating and ventilating and refrigerating company, McQuay International Ltd, alone is expected to bring US$10 million annually after two of three years of initial development if McQuay’s sales expectations are realised.
"Progress continues to be made in improving the financial performance of the business, with both sales revenues and EBITDA profit increasing whilst we have maintained a reduced overhead expenditure. The recent long term agreement with McQuay International for development of new products, in addition to the existing products already being delivered, underlines the potential that the business has for future growth,” said chief executive Paul Summers.
Turbo Power said the majority of its customers and markets were resilient as governments continued investing in large scale infrastructure projects including transport initiatives, while defence spend in both the UK and US appeared stable, proving future opportunities for TPS technology.