Watlington Waterworks made money while the sun shone in 2004, as it yesterday reported record profits for the third successive year.

But it warned that lower than average temperatures and higher than average rainfall in the first quarter of 2005 had depressed demand and it was reluctant to predict another record profit this year. Watlington said its net earnings for the year increased 17 percent from $1.95 million or $1.70 per share in 2003 to just under $2.3 million or $1.90 per share in 2004.

?This result was due in part to a lengthy period of below average rainfall in the first half of the year, which inevitably assisted by creating very strong demand for our products and services through the first half of they year,? the company said.

?Demand remained strong through most of the second half of the year enabling the company to achieve record annual sales.

?Our recent past investments in capital improvements have resulted in improved operational efficiencies, which have enables us to keep operational expenses constrained thereby contributing to our overall improved net earnings.?

Revenue also increased, rising to $9 million in 2004 compared to $8.25 million a year prior.

The company also reported to shareholders that it had upgraded its plant in the last year, with replacement of 12,000 feet of old water mains and completion of several smaller pipe-laying projects to strengthen the group?s underground pipeline network.

?Over the past two years, the company has replaced approximately 17,000 feet of old water mains. As a direct consequence, the company has seen over 60 percent reduction in mains leaks,? the report explained.

?Plans to build a substitute reservoir for our 70-year-old reservoir were approved during the final quarter of the year, and the company entered into an agreement with an overseas specialist contractor to build the reservoir,? it continued.

?It is anticipated the new reservoir will be completed and commissioned during the first half of the current year. The replacement of the old reservoir with a new and larger facility on the same site will commence late this year.?

The company said the company also planned a new salt water reverse osmosis (SWRO) plant, which would increase its water production capabilities.

So far in 2005, the company said demand for its products and services had dipped.

?This is attributed to the more severe winter weather we have experienced. Temperatures have been below average and rainfall has been higher than for the same time last year.

?These environmental factors naturally depress demand for our products and services therefore our earning for the first quarter of this year are expected to be less than for the same period last year.

?While a quarter does not make a year, the poor start to this year will make it difficult to have a fourth successive record year although we are optimistic that this year?s results will be favourable.?