13/05/2003 - 22:00

Water contracts provide boost for ESI

13/05/2003 - 22:00

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A SPATE of new contracts has provided a welcome boost for Perth company Environmental Solutions International.

A SPATE of new contracts has provided a welcome boost for Perth company Environmental Solutions International.

Contracts for drinking water and wastewater treatment plants have provided good news for ESI, which expects to start next financial year with a record order book exceeding $50 million.

The water contracts have offset ESI’s continued failure to win orders for Enersludge, a patented process for the recovery of energy from sewage and industrial sludge.

ESI’s ongoing battle to commercialise Enersludge has highlighted the wide gap between identifying an environmental problem and selling a profitable solution.

The company commissioned a $22 million Enersludge plant at the Subiaco sewage treatment plant in 1999 but has been unable to win further orders.

Managing director Denis Glennon said the company had changed tack to try and achieve more success.

“In view of the slower than expected take up of thermal technologies such as Enersludge in the sewage sludge market in parts of Europe, we have shifted our focus to the US and Japanese markets,” he said.

Mr Glennon said that, contrary to earlier expectations, regulators in Europe had moved slowly to prohibit land-based disposal of sludge.

In contrast, some States and municipalities in the US had acted to restrict land-based disposal.

A positive development in Europe was tighter regulation of emissions from waste incineration plants.

Mr Glennon said this had added to the cost of building new incineration plants, which indirectly made Enersludge more competitive.

Hartleys analyst Steven Piotrowski considered ESI a mixed bag.

“The absence of positive news in relation to Enersludge revenue is disappointing,” he said.

“However the success of ESI’s entry into the drinking water market and the continued success in the wastewater treatment sector is encouraging.”

In response to ESI’s contracts announcement, Mr Piotrowski downgraded his earnings forecast for 2002-03 but upgraded the outlook for the following year.

He is forecasting a net loss of $2.3 million in 2002-03.

Revenue is expected to nearly double in 2003-04 to $31 million and net profit is tipped to be $2 million.

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