Citic Envirotech 3Q18 net profit drops 55 percent on lower margin on civil works

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Citic Envirotech reported on Wednesday that its third-quarter net profit dropped 55 percent on-year to S$23.86 million as revenue for the period was mainly from civil works, which had lower gross profit margin.

Revenue, including finance income from service concession, for the quarter ended 30 September rose 4.1 percent on-year to S$238.21 million, the company said in a filing to SGX after the market close on Wednesday.

The increase in revenue was mainly on the 2.4 percent on-year rise in engineering revenue and membrane system sales to S$188.4 million in the quarter, it said.

Material purchased, consumables used and subcontractors’ fees increased 24.9 percent on-year to S$154.78 million in the quarter, Citic Envirotech said. Other operating expenses rose 44.0 percent on-year to S$23.02 million, mainly on new additions of treatment plants during the period, it said.

The gross profit margin for the quarter dropped to 25.4 percent from 38.9 percent in the year-ago period, it said.

For the nine-month period, net profit rose 22.0 percent on-year to S$109.12 million, while revenue, including finance income from service concession, rose 70.2 percent on-year to S$788.44 million, Citic Envirotech said.

Management was upbeat on the outcome.

“We are pleased to have improved on our topline in the third quarter of 2018 despite the uncertain global economic condition,” Hao Weibao, executive chairman and group CEO, said in a statement.

“In China, which is our main market, the government has rolled out increasingly progressive environmental policies to curb pollution and promote ecological restoration. As such, the group remains optimistic about our prospects because we believe our expertise and solutions to address these environmental issues positions us very well to reap the benefits of the country’s efforts,” he said.

The company will continue to seek projects in water treatment, while looking for opportunities in related environmental services, including ecological restoration, hazardous waste treatment, sludge management and integrated environmental services, it said in the statement.


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