Watlington Waterworks posts $1.9 million profit
Watlington Waterworks says its monthly sales are at 40- to 50-year lows due to rainfall patterns and the shrinking economy.
The company posted full year financial results yesterday, showing a profit of $1.9 million for 2012 compared to $2 million in 2011. Revenue was $10.5 million compared to $10.7 million in 2011.
The water utility division saw total revenue of $6.3 million compared to $6.6 million in 2011, with a profit of $1.34 million compared to $1.6 million in 2011.
Its bottled water (Pure Water) division made total revenue of $3.72 million for the company compared to $3.69 million in 2011 with a profit of $852, 577 compared to $778,005 in 2011.
In a letter to shareholders Watlington Waterworks stated: "The Company’s performance through the year 2012 followed a similar pattern to the previous year. This was due to repetitive weather trends. The first half of the year was very strong due to below average rainfall in the first five months of the year, as rainfall barely registered 50 percent of average. This saw the demand for the Company’s products and services peak in the second quarter.
“During the second half of the year we received substantial rainfall that reduced the annual deficit significantly. This reduced demand for the Company’s products and services dramatically with the monthly metered water sales among some of the lowest recorded in 40 years during the third quarter which has traditionally been a strong quarter.”
The company continued: “While there is a strong negative correlation between water sales and rainfall, the latent effects of the economic downturn have had a significant impact. Monthly sales at 40 — 50 year lows were not due solely to high rainfall. We have continued to see our market shrink as more homes and offices were vacated during the year.
“The Company, in accordance with the Memorandum of Understanding with Public Works, did extend its new pipeline to the West by making the water crossing at Somerset Bridge. This was expected to be the most difficult phase of the entire project.”
The company said this project is now poised to resume later this year by further extending the pipeline towards Somerset.
Meanwhile discussions with Government regarding the acquisition of their assets in the West End under the terms of the Memorandum of Understanding are ongoing.
“Infrastructure strengthening has been a constant in our development for the past twenty years,” Watlington Waterworks said.
“This remains as important today as it was previously. We cannot afford to cease infrastructure strengthening and redevelopment because a reliable and resilient water infrastructure system is necessary and essential to any thriving community. Infrastructure strengthening is multidimensional because we manufacture, store and distribute our products.
“Unaccounted water is an important aspect of infrastructure strengthening in which the Company will be making future investment, because of the potential benefit to be realised by reducing unaccounted water losses. Therefore despite the economic downturn we continue this policy albeit on a basis to conserve capital during these financially challenging times. The future remains uncertain as to when we may see a revival in economic growth. We will maintain our current business model and strive to sustain profitability through restructuring measures designed to improve operating margins.”