Monday evening, Consolidated Water Co. Ltd. (CWCO), an operator of seawater desalination plants and water distribution systems, reported a 33% decline in profit for the fourth quarter from the prior-year period, hurt by a loss recorded from its equity in the financial results of its British Virgin Islands affiliate, OC-BVI.
For the fourth quarter, the Cayman Islands-based company reported net income of $1.78 million, or $0.12 per share, down from $2.67 million, or $0.18 per share, in the prior-year quarter. On average, four analysts polled by Thomson Reuters expected the company to report earnings for the quarter of $0.13 per share. Analysts' estimates typically exclude special items.
The company recorded a loss of about $0.57 million from its equity in the financial results of the company's affiliate, OC-BVI, compared to income from its equity in OC-BVI of $0.30 million and profit-sharing in the income of OC-BVI of approximately $0.11 million in the prior-year period.
Revenues for the quarter climbed 18% to $16.3 million from $13.8 million in the same period last year. Analysts had a consensus revenue estimate for the quarter of $14.56 million.
Retail water sales for the quarter declined 12% to $4.5 million from $5.2 million in the prior-year quarter. Bulk water revenues rose 12% to $7.5 million from $6.7 million in the previous-year quarter, while services revenues more than doubled to $4.4 million from $2.0 million in the prior-year quarter.
For fiscal year 2008, the company's net income declined 37% to $7.21 million, or $0.50 per share, from $11.39 million, or $0.79 per share, in the prior year. Analysts expected the company to report earnings for the year of $0.51 per share.
The decline in net income for the year was primarily due to a loss recorded by the company on its equity in the results of its British Virgin Islands affiliate OC-BVI as well as the absence of profit-sharing income from OC-BVI. In the prior year, the company recorded earnings from its equity in the results of OC-BVI as well as profit-sharing income from OC-BVI. Revenues for the year climbed 21% to $65.7 million from $54.1 million in the prior year. Analysts had a consensus revenue estimate for the year of $58.71 million. Rick McTaggart, Chief Executive Officer of Consolidated Water Co. Ltd. said, "While our overall profitability declined due to factors related to our 43%-owned OC-BVI affiliate's ongoing dispute with the British Virgin Islands government, the company still generated net income of $7.2 million, or $0.50 per diluted share, on revenues of $65.7 million in the most recent year. We paid cash dividends at a $0.26 per share annualized rate throughout the year, continuing an uninterrupted 24-year record of cash dividend payments by the company."
Taggart added, "Regarding our OC-BVI affiliate's contract dispute with the BVI government, OC-BVI's Board of Directors continues to believe that OC-BVI is contractually entitled to full payment of all amounts billed to date for water supplied to the BVI government and that OC-BVI will ultimately collect all amounts billed. However, OC-BVI's results for 2008 have been, and will continue to be, reflected in our results of operations using the cash, rather than accrual, recognition method for OC-BVI's revenues until the dispute is resolved."
CWCO closed Monday's regular trading session at $9.06, up $1.18 or 14.97% on a volume of 0.19 million shares.
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