Hyflux’s net profit tumbles by 90% to $2.6m in 2Q

On back of its sinking margins.

The utilities firm can’t quite catch a break as its bottomline fell by 90% despite seeing its revenue surge by 174% to $260m.

According to a report by OCBC, the revenue was boosted by EPC revenue from the TuasOne Waste-to-Energy (WTE) project and the Qurayyat Independent Project (QIWP).

However, the report added that due to the revenue mix, gross margin dipped to just 28% in 2Q, leading to the drop in net profit.

Looking forward, outlook remains cautious for Hyflux and profitability remains weak, accordin gto OCBC.

“Despite stronger project revenue and profit contributions from its EPC activities, Hyflux continues to expect weak financial performance from its Tuaspring power plant in 2H16, citing still weak electricity prices and higher amortisation and financing costs of the Tuaspring power plant that could have an adverse nearterm impact on profitability,” the report noted.

Additionally, despite the group’s sizable order book at $3.1b, management remains cautious given the sustained low oil price environment and economic uncertainties arising from Brexit.

“Green shoots on consumer front And on the consumer front, Hyflux expects to commence production of ELO drinking water in Singapore in 3Q16; besides retailing the oxygenrich water in Singapore, it also has plans to export the bottled water in China, Malaysia and Indonesia soon,” the report added.