'Macro factors' to blame for China's slowing desalination market - Hyflux

Aug. 6, 2013
Singapore water firm Hyflux has reported a marginal rise in profit in the second quarter of 2013 yet has said the Chinese market is experiencing a slow-down in industrial output...

Singapore water firm Hyflux has reported a marginal rise in profit in the second quarter of 2013 yet has said the Chinese market is experiencing a slow-down in industrial output.

The group reported a fall in group revenue from S$138.4 to S$183.6 million (25%) in the quarter yet saw profit after tax rise to S$17.7 million compared to S$17.5 million in 2012.

Excluding China, the Asia region made up 86% of the group’s total revenue in the second quarter.

However, lower than expected revenues from China were attributed to “macro factors”.

As a result, Hyflux has withdrawn from two water projects at the Hechuan Industrial Park in Chongqing City, China due to a “foreseeable low off-take volume of the water”.

The exit from the two projects is not expected to have any material financial impact on the Group for the financial year ending 31 December 2013.

In February 2012, China’s State Council announced its 12th Five-Year Plan (FYP) for desalination, establishing a higher than expected target of 2.2-2.6 million m3/day of online capacity by 2015, versus less than 1 million m3/d today.

Despite the skepticism over the Chinese market, Hyflux said it will continue to focus on opportunities in regions such as the Yunnan province where the Group has signed two memoranda of understanding for the development of water projects.

The company has also developed China’s largest membrane-based seawater desalination plant in Tianjin Dagang, which has a current designed capacity of 100,000 m3/d that is expandable to 150,000 m3/d.

In India, the Group is working towards financial close for its joint desalination project with Hitachi. In addition, it is working on securing projects in the states of Gujarat, Tamil Nadu, Karnataka and Andhra Pradesh.

Next month will see Hyflux open its second desalination facility in Singapore – the new 318,500m3/day Tuaspring Desalination Plant (see WWi article).

Maybank has been appointed to arrange the non-recourse project financing for the desalination plant, including its on-site power plant with financial close expected in the third quarter of FY2013.

Earlier this year Hyflux joined forces with Danish pump manufacturer Grundfos to develop a standardized ultrafiltration (UF) membrane-based sub-system for the treatment of surface and groundwater (see WWi story).

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Related information

Hyflux's second quarter report

About the Author

Tom Freyberg

Tom Freyberg is an experienced environmental journalist, having worked across a variety of business-to-business titles. Since joining Pennwell in 2010, he has been influential in developing international partnerships for the water brand and has overseen digital developments, including 360 degree video case studies. He has interviewed high level figures, including NYSE CEO’s and Environmental Ministers. A known figure in the global water industry, Tom has chaired and spoken at conferences around the world, from Helsinki, to London and Singapore. An English graduate from Exeter University, Tom completed his PMA journalism training in London.

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