The Straits Times / The Business Times News on Hyflux

Hyflux's Q3 profit doubles

China and S'pore activities help boost revenueby 143%

WATER treatment specialist Hyflux yesterday reported a sharp jump in revenue and earnings for the third quarter as sales increased in China and Singapore.

For the three months ended Sept 30, net profit attributable to equity holders jumped 111 per cent to $13.6 million from a year ago while group revenue increased 143 per cent to $50.5 million. Earnings per share improved by 93 per cent to 2.67 cents.

Net profit attributable to equity holders jumped 136 per cent to $36.6 million in the first nine months of this year, with revenue growing 84 per cent to $93.6 million. The increase in revenue in the third quarter was largely owing to higher municipal sales in China and Singapore, which now make up a total 74 per cent of group revenue compared to 2 per cent a year ago, the company said.

With the divestment of a 50 per cent equity stake in SingSpring, the desalination plant project at Tuas, Hyflux recognised 50 per cent of the remaining engineering, procurement and construction (EPC) revenue and profit during the quarter.

Costs, however, increased in tandem with higher revenue. Expenses for raw and consumable materials rose by 295 per cent to $30.5 million.

Personnel expenses increased by 55 per cent to $4.5 million, primarily as a result of additions in manpower for research and development and for the engineering and technical teams required to execute larger projects. Manpower resources were also needed to expand existing markets and develop new ones.

Other operating expenses rose 330 per cent to $8.0 million, due mainly to higher sales, higher deve-lopmental and marketing expenses and professional fees. Depreciation and amortisation charges increased 40 per cent to $1.1 million from the acquisition of property, plant and equipment.

Hyflux said it made a gain of $4.5 million at the group level from the divestment of the equity stake in SingSpring.

While focused on carrying out established projects in China, Singapore and the Middle East, the group said it continues its efforts to expand its presence in China and the Middle East and develop new markets in the region, including India.

As it expands in China and the region, Hyflux said it will adopt an asset-light strategy by divesting its interests in asset-intensive build-own-operate/transfer projects (BOO/BOT). This will free up financial resources as well as put it in a position to take on debt in order to undertake new projects and enter new markets.

'We are focused on developing a sustainable growth strategy, developing new markets and enhancing our recurring revenue stream,' said Olivia Lum, the group CEO and president.

'We will further sharpen our competitive edge, strengthen our track record, and harness our proven capabilities to further tap the growing demand for fresh water.'