Watlington Waterworks Ltd saw their profits slide 7.2 percent to $1.76 million, as abundant rainfall contributed to the company’s weakest results in five years.

The Bermuda Stock Exchange-listed company provides potable water through its pipelines to commercial and retail clients, through the processing of groundwater or reverse osmosis of seawater.

Revenue fell almost seven percent to $9.74 million, compared to $10.47 million in 2012.

The $1.75 million profit broke down to $1.65 per share and was down from $1.89 million, or $1.79 per share recorded in 2012.

The company also announced that its 25-year operating lease with GE Ionics for brackish water treatment facilities expired last month and will not be renewed.

The facility will be replaced with a new company-owned brackish water reverse osmosis (BWRO) plant, Watlington stated. The new plant was set to be installed immediately after the lease agreement ended.

In its letter to shareholders, published via the BSX today, Watlington said: “The demand for the company’s products and services has a strong negative correlation with natural rainfall. The year 2013 had abundant rainfall throughout most of the year. There was only one month, July, when rainfall was low leading to a short summer dry spell. As a consequence sales and earnings were relatively weak compared to recent past years.

“Our well documented economic downturn also continues to be a factor and when combined with the rainfall effect resulted in the company having its weakest year in five years.

“Despite the sales slump due to the rains the company is seeing benefit from its long-term commitment to infrastructure strengthening and expansion. Although there was substantial shrinkage in sales during 2013, net earnings remained reasonable with strong positive cash flow.

“Weather patterns change through cycles and while the company has no control over the weather cycles that can strongly influence sales, the fact that the company has been able to maintain a reasonable level of success should give shareholders confidence with respect to the company’s ability to perform in the face of adversity. This robustness can be attributed to the commitment to keep investing back into the company to strengthen and expand infrastructure.”

Watlington also gave an update on its plans to extend its pipeline into Somerset.

“The project to expand our pipeline into Somerset that was temporarily halted after crossing the water at Somerset Bridge was resumed in the fourth quarter. The aim is to fulfil this part of the Company’s obligation under the Memorandum of Understanding with the Bermuda Government during 2014. “Another pipeline project that had been initiated several years ago as a part of a Belco project was also taken up again during the year. This was the pipeline from Admiralty Park to Spanish Point.

“These two projects will enable the company to offer its product and service to many new clients as both pipelines will supply to densely populated residential areas. This will represent a number of years of future development as secondary water mains are installed throughout these areas.”

Watlington added that the redevelopment of its 32 Parsons Lane site began during the year with the construction of a new electrical vault and a new pre-engineered building to be used as a warehouse and bottling plant.

“It is anticipated that the benefits from these infrastructure projects will begin to be realised in the coming year and should become much more apparent in future years,” Watlington stated.

“It is intended to redevelop the Parsons Lane facilities in phases that will be reflective of the strength and recovery rate of our national economy and the opportunities that may flow from the recovery.”