Rainfall Affects Watlington Waterworks Earnings

May 13, 2014

Watlington Waterworks Ltd. released the financial results for the fiscal year end 31 December, 2013, saying that  2013 had “abundant rainfall,” and as a consequence “sales and earnings were relatively weak compared to recent past years.”

In a letter to shareholders the Company stated: ”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.

“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 fulfill 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.

“The Company’s twenty five year operating lease with G. E. Ionics for brackish water treatment facilities will end during April 2014. The lease is not being renewed and the facility will be replaced with a new Company owned brackish water reverse osmosis [BWRO] plant. The new plant will be installed immediately after the lease agreement ends.

“The redevelopment of the “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 realized in the coming year and should become much more apparent in future years. 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.

“Capital deployment will continue to be defensively balanced towards infrastructure projects that sustain or improve operating margins to keep the Company on a sound financial footing through this challenging economic period.”

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  1. Wish says:

    I wish they would fix the roads properly after they dig them up. They are extremely uneven. They should be made to pave the whole road back.

    • micro says:

      Should be law to return the road surface to the way they found it or better, and have to return to fix any spots that sink in once the ground settles.