No rise in Towngas tariff as profit beats forecast
Hong Kong and China Gas, better known as Towngas, says it will not raise its basic gas tariff this year after posting a better-than-expected 10 per cent rise in net profit.
The distributor of heating and cooking gas, one of Hong Kong's utilities companies, said the decision was 'to ease the financial burden on domestic town gas customers'.
'Hong Kong is still affected by global economic instabilities and all business sectors are being impacted by a surge in operating costs due to high inflation,' said chairman Lee Shau-kee. Hong Kong Electric, Hong Kong Island's power supplier, was forced to cut its price hike this year to 6.3 per cent from a proposed 8 per cent amid public outrage, while CLP Power, the power supplier for Kowloon and the New Territories, reduced its price hike from a proposed 9.2 per cent to 4.7 per cent.
Towngas yesterday posted net earnings of HK$6.15 billion for last year, up from HK$5.58 billion in 2010.
The result is 7.7 per cent ahead of the HK$5.71 billion average estimate of 16 analysts polled by Thomson Reuters.
Revenue grew 15.7 per cent to HK$22.42 billion, thanks to a 2.1 per cent increase in local gas sales volume, and a 20.6 per cent surge in gas sales on the mainland to 10.3 billion cubic metres.
The firm's local gas distribution and landfill gas utilisation businesses posted a 6.7 per cent increase in ebitda (earnings before interest, taxes, depreciation and amortisation) last year to HK$4.43 billion.
Towngas said the growth of gas sales in the city was mainly because of the addition of several new commercial and industrial customers, as well as slightly-lower temperatures compared to 2010.
It forecast the addition of about 25,000 new customers in Hong Kong this year, with restaurant, hotel and retail clients expected to see better business due to the growing tourism industry.
The ebitda of its mainland gas distribution, water treatment and other energy and coal-based chemicals businesses rose 36.3 per cent to HK$2.9 billion.
As of the end of last year, the firm operated 138 city-gas distribution projects on the mainland, up from 120 in 2010. It has 13.2 million mainland gas customers, up 10.9 per cent from 2010.
Towngas' mainland revenues, which stood at HK$11.75 billion last year, outpaced its Hong Kong revenues of HK$9.85 billion for the first time.
It also expects profits from the mainland to exceed those from Hong Kong this year.
This year, the company expects to start building a plant to liquefy methane gas extracted from coal mines in Shanxi province, and plans for it to be operational in 2014. It also expects to commission a plant that turns coal into coke - a material used in steel-smelting, whose production will generate a by-product gas.
Both types of gases will be used for its gas distribution business.
Last year, Towngas invested HK$4.73 billion in production facilities, pipelines and other fixed and intangible assets in Hong Kong and the mainland.
Towngas had stakes in this many utility projects across 19 provinces on the mainland at the end of December last year