Hyflux posts 55% fall in Q3 profit, sounds note of caution about Q4 (Amended)

Singapore

WATER treatment group Hyflux Ltd sounded a cautious note on its business prospects on Wednesday, with its net profit for its third quarter falling 55 per cent on weaker sales.

"The group remains cautious on its business outlook given the mixed global economic conditions and expects the last quarter to remain slow," it said in its financial statement.

It noted that the delay in the connection of the national power grid to the Tuaspring power plant will continue to have "operating cost implications over the next few quarters".

And despite the sanguine outlook for the global water industry, the momentum of municipal projects available for tender has been slower than anticipated in the past year, Hyflux said.

Net profit for the three months ended Sept 30, 2014 stood at S$11.3 million, down from S$25.3 million a year ago. This translated to a loss per share of 0.07 Singapore cent, which reflects an adjustment for dividends of S$11.8 million attributable to perpetual preference shares and perpetual capital securities holders.

A year ago, Hyflux posted earnings per share of 2.33 Singapore cents.

Revenue dropped 46 per cent to S$101 million, which reflected "the timing of projects commencement" in the year, Hyflux said.

The group's net gearing ratio improved to 0.41 times as at end-September, compared to 1.15 times as at end-December.

For the nine-month period, net profit surged to S$111 million, compared to S$51 million a year ago.

Besides pursuing municipal and industrial projects, Hyflux said it would continue to explore opportunities to recycle capital for strategic investments.

"At the same time, the group sees opportunities in infrastructure development projects in Africa and Asia where it can offer value through affordable water and accessible power."

Shares of Hyflux closed on Wednesday down half a Singapore cent at S$1.005.

An earlier version of the story incorrectly stated that the increase in net profit was a slump. The article above has been revised to reflect this.