Darco Water Technologies: A Turnaround Story in 2024

Darco Water Technologies Limited (SGX:BLR) reported its full-year earnings for 2024, marking a significant turnaround from the previous year. The company's earnings per share (EPS) from continuing operations was SGD 0.011, a stark contrast to the loss per share of SGD 0.058 in 2023. This article will delve into the key factors that contributed to this impressive turnaround and discuss the company's prospects for the future.

Revenue Growth and Cost Management

Darco Water Technologies' revenue growth and cost management strategies played a crucial role in its improved financial performance in 2024. Although the company's revenue decreased by 15.82% year-over-year (YoY) to SGD 59.14 million, this decline was an improvement compared to the 30.13% decrease in 2023. This indicates a trend of stabilizing revenue, which is a positive sign for the company's financial health.

The company also managed to reduce its cost of revenue from SGD 60.64 million in 2023 to SGD 47.23 million in 2024, a decrease of 22.17%. This reduction in cost of revenue contributed to the company's improved gross profit margin. Additionally, Darco Water Technologies reduced its operating expenses from SGD 14.13 million in 2023 to SGD 10.37 million in 2024, a decrease of 26.67%. This reduction in operating expenses contributed to the company's improved operating income.

Improved Gross Margin and Operating Income

Darco Water Technologies' gross margin increased to 20.13% in 2024, up from 13.67% in the previous year. This improvement in gross margin suggests that the company has been able to control its costs more effectively, leading to higher profitability. The company's operating income increased to SGD 1.54 million in 2024 from a loss of SGD 4.52 million in the previous year, reflecting its improved operational efficiency.

Long-term Sustainability

The long-term sustainability of Darco Water Technologies' improved financial performance depends on various factors, such as the company's ability to maintain its market position, adapt to changing market conditions, and continue to improve its operational efficiency. Additionally, the company's ability to generate new revenue streams and expand its customer base will be crucial for long-term growth and sustainability.

In conclusion, Darco Water Technologies' earnings turnaround in 2024 can be attributed to a combination of factors, including improved revenue growth, increased gross margin, reduced operating expenses, and increased EPS. These factors contributed to the company's net income of SGD 1.01 million in 2024, compared to a net loss of SGD 5.42 million in the previous year. As the company continues to focus on revenue growth and cost management, investors can expect to see further improvements in its financial performance in the coming years.