Citic Pacific's core earnings rise to HK$5.3b
Conglomerate Citic Pacific has put the investment setbacks of two years ago behind it, announcing 14 per cent growth in underlying profit to HK$5.3 billion last year.
However, a management reshuffle is looming.
Taking into account one-off gains and revaluation surplus of properties, net profit leapt 49.83 per cent to HK$8.91 billion, or HK$2.44 per share.
The group's core business, special steel manufacturing in the Yangtze River Delta, generated a 49 per cent jump in profit to HK$2.1 billion driven by larger output and an 18 per cent increase in selling prices.
Chairman Chang Zhenming said the group had 'emerged from the difficulties faced two years ago' when his predecessor Larry Yung Chi-kin was forced to step down over a Securities and Futures Commission probe into his alleged involvement in an improper property deal on Hainan Island. The probe continues.
To strengthen its corporate governance, five Citic Pacific directors will resign in May to be replaced by only two independent non-executive directors. The five comprise two executive directors, Li Shilin and Wang Ande, who have reached retirement age. The others are non-executive director Willie Chang, independent non-executive director Hansen Loh Chung-hon and independent non-executive director Norman Ho Hau-chong.
Citic Pacific managing director Zhang Jijing said Gregory Curl, the president of Singapore's sovereign investment firm Temasek Holdings, and a former KPMG senior partner, Francis Siu Wai-keung, would be appointed independent non-executive directors.
Looking ahead, Chang warned of headwinds in the mainland's specialty steel industry, which was plagued by growing capacity and downward pressure on prices.
Challenges also arose from its magnetite iron ore mining project in Western Australia, a US$5.2 billion project which will employ 4,500 workers and produce 25 million tonnes of the mineral annually.
He said the start of production had to be put back from last December to July at the latest because of disputes with contractors building the infrastructure.
Chang confirmed that Citic Group is preparing for a listing but said there was no specific timeframe.
Citic Pacific proposed to lift the final dividend 20 per cent to 30 HK cents per share, bringing the full-year total to 45 HK cents per share, up 12.5 per cent. The stock jumped 80 HK cents, or 3.85 per cent, to HK$21.55 after the results announcement.
Bottom line
Stripping out one-off gains and revaluation surplus of properties underlying profit rose: 14%
