Citic Envirotech swings to 3Q19 net loss on lower contributions from engineering business

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Citic Envirotech reported Thursday a third quarter net loss of S$4.0 million, from a year-earlier net profit of S$23.86 million, on higher expenses and a lower contribution from the engineering segment.

Revenue for the quarter ended 30 September dropped 31 percent on-year to S$164.30 million, the water infrastructure company said in a filing to SGX.

The revenue contribution from the engineering business dropped 61.2 percent on-year to S$47.7 million, the filing said.

Membrane system sales declined 18.3 percent on-year to S$53.5 million for the quarter, the filing said.

The foreign currency exchange loss widened to S$26 million for the quarter from S$2.17 million in the year-ago period, mainly on U.S. dollar denominated bank loans as the yuan weakened against the greenback, Citic Envirotech said.

Excluding the foreign-exchange loss, the company would have posted a profit after tax of S$22 million for the quarter, the filing said.

Finance costs climbed 60.2 percent on-year to S$17.16 million, the filing said.

Employee benefits expenses climbed 73 percent on-year to S$23.27 million, mainly on transferring S$5.1 million in shares to key employees in Memstar USA as part of an incentive package, the company said.

For the nine-month period, Citic Envirotech reported a net profit of S$15.38 million, down 85.9 percent on-year, on revenue of S$439.28 million, down 44.3 percent on-year.

Citic Envirotech issued a positive outlook.

“Despite headwinds caused by events in the macroeconomic environment, CEL is optimistic that the fundamentals of its core wastewater treatment business and its hazardous waste treatment business remain strong as China’s clean-tech solutions industry is well-supported by the country’s strict environmental mandates,” the company said.

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