Waste water treatment company Hydro International has suffered a 70 per cent fall in pre-tax profit for the first half of 2012.

Pre-tax profit for the six months ended June 30 2012 amounted to £283,000, down from £951,000 for the same period last year.

Chief Executive Steve Hides said that gross profit was affected by a shift of sales mix towards lower margin, distributed products.

"Changes in sales mix between distributed and proprietary products leads to variations in the overall profitability of products sold,” he said.

"This is often difficult to predict and Hydro's strategy is to mitigate this through further diversification across geographies and a broadening of our proprietary product portfolio.”

Adjusted operating profit margins for the company fell to 2.8 per cent in the period compared with 8.4 per cent a year ago.

Despite a decrease in profit and margins, revenue grew to £15.3 million, up from £13.7 million year on year.

The company said that a significant increase of activity in the AMP5 programme as well as Hydro’s continuing work with Thames Water helped deliver the increase in revenue.

The order book at 30 June 2012 stood at £17.1 million compared to £15.3 million in 2011.

Mr Hides added:

"Hydro made good progress on both fronts during the first half with the establishment of a foothold in several new territories through high-calibre distribution partners, and through new product launches.

"We anticipate that our full year results will be heavily second half weighted although sales will continue, as in the first half, to include a similar proportion of lower margin distributed products.

"Our core markets of the US and UK are expected to remain challenging, however, Hydro remains financially robust and continues to make good progress with initiatives to underpin future growth for the business."