• 
• 

Published on March 5, 2008

Eastern Water Resources Development will raise its prices of raw water 10-12 per cent following rises in energy costs.

President and CEO Praphant Asava-aree said the company would increase the price gradually, in order to prevent a shock effect on its customers.

He said the hike of electricity prices had affected the company strongly, because electricity accounts for 38 per cent of overall costs.

"Our production costs have risen about 17 per cent. The price adjustment will not only compensate for the higher costs, but also cover our investment over the next five years," Praphant said, adding the company expected the price hike to soon boost its ROE from 10 per cent to 15 per cent.

It will also sign a contract with its customers to guarantee an annual minimum purchase of raw water in April. In the future, it plans to sell raw water at the same rate in all areas.

However, legally, the company  has to inform customers at least 120

days in advance of a price increase,  Praphant said.

The company plans  to invest around Bt50 million to build a mini-hydropower plant to cut its energy costs. The plant is scheduled to start construction this year and will be complete in the next few years, he said.

Eastern Water will reduce its shares in Eastern Hobas Pipe from 50 per cent to 24 per cent due to losses of Bt10 million per month. Prapjant said the company was negotiating with local firms and expects to reach a conclusion in the next quarter.

In addition, it will sell its 15-per-cent share in Egcom Tara, worth Bt345 million.

Kimeng brokerage reported these changes would boost  company profits 16 per cent to Bt510 million this year, thanks to a business restructuring and revenue recognition from new projects.

Pairoj Sattayasansakul, managing director of Universal Utilities, a subsidiary of Eastern Water, said the tap-water business had posted average growth of 26 per cent per year, due to rising demand in the market. The company projects to boost  tap water revenue from Bt680.43 million to Bt756.58 million this year. Net profit is forecast at around Bt96.59 million, up from Bt82.18 million last year.

However, Pairoj said this projection did not include new projects under negotiation.

The company decided to bid on a water-management project in Vietnam, which will be finalised about the middle of next month.

"If we win the bidding, our revenue will reach Bt1 billion this year," Pairoj said.

The company recorded sales of Bt135.17 million in the first quarter, an increase of 15.7 per cent, thanks to growth in demand from new waterworks in Rayong and Surin provinces.

Eastern Water's total revenue for its first fiscal quarter, from October to December 2007, was Bt569.9 million, down 2.29 per cent from the same period the year before. It posted a net profit of Bt111.79 million, down 7.29 per cent year on year.

However, its gross profit margin remained 55.6 per cent, similar to the previous year's first quarter, due to efficient cost controls.

The Nation