MTR profits dip 6.6pc amid slowdown in property sales

Profits dip 6.6pc - and another year of slower growth is forecast with review of formula for adjusting fares likely to curb price increases

PUBLISHED : Tuesday, 12 March, 2013, 12:00am
UPDATED : Tuesday, 12 March, 2013, 6:27am

The MTR Corporation faces another year of slower growth despite plans to sell 5,000 flats, it emerged yesterday.

The company announced a 6.6 per cent drop in underlying profit to HK$9.78 billion in the year to December, mainly due to lower returns on property sales.

Presales of flats at four developments - Tsuen Wan West Station, Austin Station, Lohas Park Phase 3 and Century Gateway in Tuen Mun - will start this year.

But no sales will be booked in time for this year's results, which will include only those of the remaining 166 units of Riverpark at Che Kung Temple Station.

That means earnings from its property division will shrink.

Another factor will be MTR Corp's income from fares.

Though fare revenue jumped 7.7 per cent to HK$14.39 billion last year, the outcome of a review of the adjustment mechanism for ticket prices is scheduled to be announced later this month.

While the company remained tight-lipped about its negotiations with the government, market expectations are that the review will be unfavourable for the company.

It is understood the government will add factors such as service quality and affordability to the existing fare adjustment formula, which could make it more difficult to increase fares.

It is anticipated the review will lead to a curbing of fare rises, after prices increased three years in a row under the existing formula.

MTR Corp deputy chief executive Lincoln Leong said that while income from property sales varies from year to year, the recurrent non-fare businesses - such as advertising at stations, property rental and management - maintain stable growth.

The firm reported an increase of 10.3 per cent in contribution to revenue from station advertising and 9.5 per cent from property rental and management, which together made up one-fifth of the company's earnings.

The company declared a final dividend of 54 HK cents, bringing the year's total payout to 79 HK cents - 3.9 per cent more than for the previous year.

Leong pledged the company would maintain a robust dividend payout policy.

The city's only rail operator continued to take up a larger market share of the public transport network.

MTR Corp chief executive Jay Walder said the firm maintained a service reliability rate of 99.9 per cent, despite several disruptions last year.

The number of incidents that caused delays of more than five minutes was cut by 23 per cent.

Figures from the Transport Advisory Committee show, however, that the number of complaints against the MTR rose 49 per cent last year to 385.

Most were about delays and because of unclear directions from staff when there were service disruptions.