Darco Water Technologies (BLR) H1 2024 earnings summary

Executive summary

• H1 revenue fell 28.8% YoY to $27.6m and net profit fell 61.1% to $197k; gross margin improved to 18.5% from 15.3%.

• Operating cash outflow was $3.1m, mainly from working capital for ongoing Projects; cash and bank balances were $8.6m at 30 June 2024 versus $12.8m at 31 December 2023.

Financial highlights

• Gross profit declined 14.1% YoY to $5.1m, while cost of sales fell 31.5% to $22.4m on lower revenue and improved Projects cost control.

• Distribution expenses fell 68.9% YoY to $195k, mainly on lower China subsidiary travel costs; administrative expenses declined 12.3% to $4.2m due to cost savings.

• Finance costs rose 32.0% YoY to $573k, reflecting higher bank borrowings and interest on amounts owing to non-controlling interests.

• Profit before tax decreased 46.9% YoY to $274k; income tax expense was $77k versus $10k in H1 2023.

Outlook and guidance

• The near-term operating environment remains challenging amid intense competition; longer-term industry fundamentals are supported by economic, population and urbanisation growth.

• Continued exploration of long-term growth opportunities includes seeking new Pneumatic Waste Conveyance System opportunities as Singapore develops public housing districts.