Low-rainfall year boosts Watlington’s sales
Watlington Waterworks Ltd’s water sales were the highest in five years in 2017, helped by an America’s Cup-inspired tourism boost and a drought, the company said in a letter to shareholders.
Revenue for Watlington, which sells piped and bottled water to households and businesses, increased to $12.06 million last year, up more than 14 per cent from $10.54 million in 2016.
Comprehensive income for the Bermuda Stock Exchange-listed company totalled $3.17 million, or $2.99 per share, up from $2.3 million, or $2.16 per share a year earlier.
The uptick in water demand in a year of below-average rainfall, combined with a reduction in waste, boosted earnings.
Watlington has declared a special dividend payment of 45 cents per share, and has raised its regular quarterly payout by 20 per cent to 18 cents per share. Both dividends will be paid on June 29 to shareholders of record as of June 15, 2018.
Watlington’s shares last traded at $26.50 on the BSX.
The directors’ report to shareholders described 2017 as “an exceptional year for the company”.
“Water sales, both piped water and bottled water were the highest in five years, and sales revenue and net earnings set new record highs for the company,” the report stated.
“In the first half of the year there were two significant reasons for the upswing; the first was much increased tourism activity due to the America’s Cup and coincident with this was an early summer drought, which led to very high demand in May and June.
“Following an outstanding first half year, the company continued to experience sustained high demand for its products and services because rainfall remained at or below average through the remainder of the year.”
Rainfall was five inches below average last year, the letter added, contrasting with 2016 when rainfall was 15 inches above average.
The company added that 2017 was the first year in the past six that rainfall was below average.
“The company has invested substantially in annual infrastructure strengthening to be able to meet maximum demand conditions projected to occur during a prolonged drought when no rainfall harvesting is possible,” Watlington’s report added.
“Apart from infrastructure strengthening management has been focused on improving performance factors so that the company produces strong results even in years of plentiful rain.
“An example of this has been the steady improvement seen over consecutive years to reduce water losses which have declined from 18.1 per cent to 10.5 per cent over the past three years.
“Given the high cost to manufacture potable water this reduction represents significant operational savings which goes directly to improved net earnings.”
The board committed to further strengthen the company’s infrastructure for future growth and to “sharing the company’s success with shareholders as the benefits of its long-term planning for public water supply are realised”.
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