Better cost management helped water treatment firm Hyflux post a marginal 1 per cent rise in second-quarter earnings despite revenue declining 25 per cent.

Net profit rose to $17.7 million for the three months ended June 30, up from $17.5 million a year ago, Hyflux said on Tuesday.

Although revenue fell to $138.4 million from $183.6 million a year ago, gross margins improved to 42 per cent in the quarter from 33 per cent previously as a result of more effective cost management.

The group is declaring an interim dividend of 0.7 cents per share, payable on Sept 5.

For the first six months of the year, Hyflux's net profit climbed 2 per cent to $25.7 million while revenue slipped 18 per cent to $262.9 million.

Revenue fell across all regions in which the group operates, Hyflux said. In particular, the slowdown in China's economy is starting to affect the company.

Hyflux said it had withdrawn from two water projects at the Hechuan Industrial Park in Chongqing City, "due to a foreseeable low off-take volume of the water". But the exit is not expected to materially impact the group's financials this year.

Nonetheless, Hyflux is pushing ahead with its expansion in China. The group has signed two memoranda of understanding to develop water projects in China's Yunnan province.