Watlington Waterworks expects a financial blow from Hurricane Fabian to cancel out its strong financial performance in the first half of the year, the company said yesterday as its Director's report for period ending June 30, 2003 was issued.

While the company experienced strong sales during the late summer drought and met its targets for the first half of the year, it said Fabian had completely changed its outlook for the remainder of 2003.

According to the water company's consolidated financial statement (unaudited) total revenue for the first six months was $3,768,060 up from $3,465,707 for the same period in 2002.

Income attributable to shareholders also rose from $455,164 in 2002 to $719,092 this year while net earnings per share jumped from $0.40 to $0.63 over that time period.

"The company's performance through the first six months of the year was on target to meet corporate objectives this year," said the press release issued through the Bermuda Stock Exchange yesterday.

"Demand for our products and services remained consistently high through the first half of the year.

"With the amortisation of Goodwill completed at the end of 2002, a decrease in depreciation charges for desalination products , there has been a significant increase in the net earnings for the half year."

But Fabian's aftermath has the company scaling back "significantly" on its forecast for the remainder of the year.

"Although the summer drought raised the demand for the company's products and services to the limit of the company's ability to produce, Hurricane Fabian has completely changed the outlook," the statement said.

"Sales are expected to drop significantly in the aftermath of the hurricane as major hotel properties have been forced to close for repairs and tourism in general is expected to suffer as a consequence.

"It is thought that this will cause a substantial short term dip in cash flow for the next six months."

The company said it may adopt a conservative fiscal policy in the short term to balance out effects of the storm.

"A longer term view is being taken to balance the short term negative effects in the aftermath of Fabian with the company's long term capital investment schedule to strengthen infrastructure for growth," the release said.