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Hyflux net profit plunges 90%, warns of challenges ahead
SINGAPORE -- Water treatment provider Hyflux warned Thursday of increasing challenges such as competition in the Middle East and low electricity prices in Singapore as April-June net profit fell 90% to 2.62 million Singapore dollars ($1.95 million).
The weak profit was despite a record order book of S$3.14 billion, as the company kept busy with a desalination plant project in Oman and a waste-to-energy plant project in Singapore.
Revenue almost tripled to S$259.9 million from S$94.8 million a year earlier, boosted by the projects in Oman and Singapore. However, costs increased accordingly. Due to the absence of divestment gains that the company recorded last year with the sale of five Chinese water companies, the bottom line shrank significantly.
"Because of the very few projects [available] in the market, we expect to see stiff competition" in the core Middle East and North Africa market, group CEO Olivia Lum told a press conference. The low oil price is causing cancellations and delays in infrastructure projects in the region, she explained.
The company also warned that an existing power plant co-located with a desalination facility in Singapore will suffer from weaker financial performance due to lower electricity prices in the city state.
Amid mounting challenges, Hyflux is banking on growth in its new consumer business. In a tie-up with Hungarian company Kaqun Europe, Hyflux has launched production and sales of oxygenated drinking water in Singapore. Lum plans to export the water to China, Malaysia and Indonesia and to expand the product line. "The consumer business will be a cushion in times of infrastructure downturns," Lum said.
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08-08-2016, 11:10 PM
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