Hyflux's earnings boosted by project completions in Q3

SINGAPORE - Hyflux net profit soared 74 per cent to $25.3 million in the third quarter from the preceding year, it said on Thursday.

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Here is the full statement from Hyflux:

Singapore, 6 August 2013 - Hyflux Ltd (or the Group) today reported a marginal rise in profit after tax and minority interests (PATMI) in the second quarter of FY2013 to S$17.7 million compared to S$17.5 million previously despite a 25 per cent fall in group revenue to S$138.4 million from S$183.6 million.

Due to effective cost management, the gross margin recorded for the second quarter of FY2013 was 42 per cent, an improvement from 33 per cent in the same reporting period in FY2012.

In the first six months of FY2013, the Group's PATMI showed a 2 per cent increase to S$25.7 million, while total revenue was 18 per cent lower at S$262.9 million.

Asia ex-China continued to drive revenue contributions, making up 86 per cent of the Group's total revenue in the second quarter and 87 per cent in the first six months of FY2013.

The Middle East and North Africa (MENA) region made marginal contributions as the markets in the region were just resuming their water infrastructure development programme. The lower revenue contributions from China were the result of macro factors.

The Group's net gearing was 0.8 times as at 30 June 2013 with a cash position of S$375.1 million.

An interim dividend of 0.7 Singapore cents per ordinary share has been declared for the six months ended 30 June 2013.

Healthy order book of S$2.7 billion

At the end of June 2013, Hyflux's total order book stood at a healthy S$2.7 billion, comprising S$1.9 billion for operations and maintenance (O&M) and S$792 million worth of engineering, procurement and construction (EPC) contracts.

The O&M order book is a summation of future revenues of the Group's portfolio of plants with between 20 and 30-year concession periods.

Official opening of Tuaspring Desalination scheduled for September The official opening of Hyflux's flagship 318,500m3/day Tuaspring Desalination Plant is scheduled to take place in September 2013. The Group has appointed Maybank to arrange the non-recourse project financing for the desalination plant, including its onsite power plant with financial close expected in third quarter of FY2013.

EPC works on the power plant are progressing as planned but its operational readiness will be dependent on the timely connection to the national power grid. The Group is working with the authority to address this matter.

Outlook

China is experiencing an economic pull-back and a slow-down in industrial output as well as credit tightening. The Group 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.

The Group will continue to focus on opportunities in growth regions in China such as in the Yunnan province where the Group has signed two memoranda of understanding for the development of water projects.

In markets such as Singapore, India, the Middle East and Africa, the Group has identified a pipeline of projects. 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.

Selective markets in the Middle East and Africa have started to revive development plans to improve their water scarcity situation, such as Saudi Arabia, Oman, Qatar, Kuwait, Algeria, Libya, Nigeria, Ghana and South Africa.