CLP may raise fees amid earnings squeeze
Power firm books big losses on overseas businesses and fuel costs are set to triple under new gas supply contract - meaning tariffs could be about to go up
CLP Holdings may propose another tariff rise in Hong Kong by the end of the year, as big losses in its overseas investments squeeze earnings and a new gas supply contract due to be signed next year triples fuel costs.
Plagued by a number of natural disasters, the group's earnings dropped 42 per cent to HK$3.36 billion over the six months to June from HK$5.8 billion a year ago - the second consecutive decline following a 10 per cent fall in earnings for the whole year of 2011.
Analysts said the outlook for the second half of the year was not bright as adverse factors - including a shortage of coal supply in India and further remedial works on the company's biggest coal-fired power plant in Australia - would remain in the short term.
CLP, however, slightly increased its interim dividend to 53 HK cents per share, up from 52 HK cents in the same period last year.
Earnings from the company's Australian business, which made up three-fifths of the group's revenue, slumped 77.5 per cent to HK$268 million during the first six months.
That was a result of losses in hedging against spot power prices and an impairment loss of HK$644 million incurred by flooding in the southern state of Victoria, which crippled three of the four units at the Yallourn Power Station in June.