Economy, drought hit Watlington profits

Watlington Waters profits fell by 5.8 per cent as the company experienced less demand for its piped water service. The company said sales were at 40 to 50 year lows. 

The company managed to approximately keep its expenses the same from 2011 to 2012, but revenue fell from $10.742 million in 2011 to $10.469 million in 2012. 

It’s bottled water division had a slight increase in revenue from $3.697 million in 2011 to $3.721 million in 2012, but the utility portion of the company saw a decrease in revenue form $6.564 million in 2011 to $6.252 million in 2012.

In a letter to shareholders the Watlington Waterworks stated: “The company’s performance through the year 2012 followed a similar pattern to the previous year. 

“This was due to repetitive weather trends. The first half of the year was very strong due to below average rainfall in the first five months of the year, as rainfall barely registered 50 per cent of average. 

“This saw the demand for the company’s products and services peak in the second quarter. 

“During the second half of the year we received substantial rainfall that reduced the annual deficit significantly. 

“This reduced demand for the company’s products and services dramatically with the monthly-metered water sales amongst some of the lowest recorded in forty years during the third quarter, which has traditionally been a strong quarter. 

“While there is a strong negative correlation between water sales and rainfall, the latent effects of the economic downturn have had a significant impact. 

Sales low

“Monthly sales at 40 to 50 year lows were not due solely to high rainfall. We have continued to see our market shrink as more homes and offices were vacated during the year.”

Watlington extended its pipeline westward across Somerset Bridge and expects to resume the project and extending it towards Somerset. 

The shareholder letter added:  “Infrastructure strengthening has been a constant in our development for the past twenty years. This remains as important today as it was previously. 

“We cannot afford to cease infrastructure strengthening and redevelopment because a reliable and resilient water infrastructure system is necessary and essential to any thriving community. Infrastructure strengthening is multi-dimensional because we manufacture, store and distribute our products. 

“Unaccounted water is an important aspect of infrastructure strengthening in which the Company will be making future investment, because of the potential benefit to be realized by reducing unaccounted water losses. 

“Therefore despite the economic downturn we continue this policy albeit on a basis to conserve capital during these financially challenging times. 

“The future remains uncertain as to when we may see a revival in economic growth. 

“We will maintain our current business model and strive to sustain profitability through restructuring measures designed to improve operating margins.”