Downhole drilling tools maker Wenzel Downhole Tools Ltd. (WZL.TO: News ) on March 9 posted a sharp increase in fiscal 2008 profit on strong topline growth, propelled by expanded rentals and sales in both Canada and the U.S. and strong international sales, according to

The company’s full year 2008 net income escalated to C$12.4 million or C$0.41 per share from C$2.39 million or C$0.08 per share in 2007.

Annual revenues for 2008 amounted to C$71.8 million, up 32% from the previous year’s revenue of C$54.2 million, owing to expanded rentals and sales in both Canada and the United States, as well as sales internationally where revenues grew by 70 percent.

Gross profit percentage was 44 percent compared to 38 percent in the year ended Dec. 31, 2007.

In addition, the company noted that its drilling activity in Canada in 2008 was up by 7 percent, while Canadian revenues rose by 25 percent, in part due to increased market share and also due to the fact more horizontal and directional wells were drilled.

Likewise, rig counts in the United States increased by 6 percent and U.S. revenues advanced by 25 percent. International sales climbed 70 percent to C$14.99 million, bolstered by a growth in the number of international customers but also some captured slippage from 2007.

Foreign exchange adjustment increased 2008 pre-tax earnings by C$1.9 million while in 2007 foreign exchange adjustments decreased earnings by C$1.4 million. Excluding the direct effects of currency fluctuations, earnings before income tax was C$10.5 million, a jump of 200 percent over 2007.

Commenting on the results, president and chief executive officer Harvie Andre said, “The global recession and related decrease in the price of both oil and natural gas is producing industry estimates of a significant reduction in wells to be drilled during 2009, particularly in North America.” Wenzel Downhole is therefore taking steps to cut costs while focusing on new market opportunities internationally and on new products.

“All things considered”, Andre added, “we expect 2009 to be challenging but believe the Company is well positioned to meet these challenges.”

Wenzel closed Friday’s trading session at C$0.61. In the past 52 weeks, the stock has been trading between C$0.55 and C$1.89.

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