THE near-completion of desalination projects in the Middle East and North Africa and the impact of the Arab Spring on new contracts caused a steep decline in profits at water treatment firm Hyflux.
Earnings plunged 40 per cent to $53 million for the year ended Dec 31, while revenue fell 15 per cent to $482 million. A lower level of divestment compared with the previous year also affected revenue and profits.
Earnings per share fell from 10.52 cents the previous year to 4.3 cents, while net asset value per share increased from 58.6 cents to 60.6 cents.
A dividend of 2.1 cents per share has been announced, down from 3.5 cents previously.
The company reported a strong cash position of $662 million as at the end of last year, up from $222 million the previous year. This was generated largely from the issuing of preferred stock and long-term bonds.
Revenue contribution from Asia rose to 76 per cent of total sales.
Revenue contribution from Singapore and countries other than China, the Middle East and North Africa jumped to 47 per cent last year, compared with 14 per cent the year before.
This was down to Hyflux ramping up activity at Singapore's Tuaspring Desalination Plant, which will add 318,500 cubic m of water a day to the national water supply when completed next year.
China provided 29 per cent of revenue, while the Middle East and Africa's contributions fell to 24 per cent from 60 per cent the previous year.
President and chief executive Olivia Lum said: 'The rise of the Arab Spring has affected prospects in (the Middle East and North Africa), and the outlook in the short term for the region remains uncertain, although there are pockets of opportunities.
'Asia, with investments earmarked for water projects to support population growth and industrialisation, will continue to drive growth for Hyflux.'
Hyflux is also expanding and enhancing work at six wastewater treatment plants in China, with an estimated project value of $88 million.
A wave of unrest in the Middle East and North Africa last year, dubbed as the Arab Spring, led to regime change in several countries.
The group reported that the short-term outlook is weak, with projected capacity cuts mainly in the Middle East and Africa, and higher operating costs, but the mid- to long-term outlook for desalination remains good.
'I believe that Hyflux is in a good situation as we have in place a strong order book and strong balance sheet, and we stand ready to capture opportunities in the global water industry,' Ms Lum said.
Hyflux shares closed five cents up at $1.58 yesterday.
'The rise of the Arab Spring has affected prospects in (the Middle East and North Africa), and the outlook in the short term for the region remains uncertain, although there are pockets of opportunities.'
