LONDON (ShareCast) - Turbotec Products plunged to its lowest ever today after the maker of heat exchangers said significant increases in raw material costs will result in profitability that will fall short of expectations for the year.

Despite this it has seen encouraging sales growth from both new and existing customers, it said in a trading statement ahead of November’s interims.

“The company is working on a number of initiatives to increase prices to recover more of the material cost increases during the balance of this fiscal year,” it added.

“Recent pilot orders received from new high volume users are at higher than normal selling prices and they will gradually improve our margin mix during 2007.”

The group is also implementing further lean manufacturing initiatives to reduce costs and improve efficiencies and is looking to hire staff to support new product lines including heat reclamation, ahead of its launch in the first calendar quarter of 2007.

In addition, Turbotec continues to see growth in the Water Source Heat Pump market and is aggressively marketing its line of Pool-Safe titanium heat exchangers to targeted major OEM's for swimming pool heat pump applications.

“Given all the ongoing internal improvement programmes and vigorous efforts in our market place that are currently being pursued, the board remains confident in the future prospects of the business for the existing and new product lines,” said the group.

Results for the six months to 30 September will be published on 7 November.

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