The Straits Times / The Business Times News on Hyflux

Hyflux earnings drop 87% to $1.4m in Q1

By Matthew Phan
May 16, 2007
The Business Times

LAG time between the signing and execution of industrial projects contributed to Hyflux's 60 per cent fall in first-quarter revenue to $13.4 million, as earnings suffered an 87 per cent plunge to $1.4 million.

Hyflux, which applies membrane technology to water treatment and other uses, said its fundamentals remain strong as it has won new projects in China and is making headway in ventures in the Middle East.

Industrial sales more than halved from $18.4 million to $8.7 million for the quarter, as 'a result of the lead time between new contracts signed and execution and delivery of these new projects', it said.

Further, there were no technology licence fees in the quarter just past, compared to fees of $4.6 million in the first quarter of 2006.

Municipal sales fell to $4.6 million for Q107, from $15 million for the previous corresponding period, due mainly to the full elimination of revenues from SinoSpring as a result of Hyflux upping its equity stake in the Chinese subsidiary from 50 to 80 per cent, it said. Lower municipal revenues were also recorded in Singapore, in line with the divestment of SingSpring to CitySpring Infrastructure Trust. A rise in expenses, such as commitment fees due to the drawdown of term loans, and higher travelling costs in line with Hyflux's expansion plans, did not help earnings. The group also booked a $3.3 million realised loss from hedging instruments.

'Hyflux's fundamentals remain strong,' said chief executive Olivia Lum. She emphasised the company is making good progress on its oil recycling venture in Saudi Arabia and that it is optimistic on China, where it had been awarded 20 municipal water treatment plant projects and is developing another 30 municipal and industrial projects.

The possible injection of completed Chinese treatment plants into a trust structure would help unlock their cash value and allow Hyflux to realise the projects' potential, Ms Lum said. China accounted for two-thirds of revenues in Q107, about the same proportion as for last year.

Hyflux saw its shares end the day 8 cents down at $2.81 yesterday.