Hutchison Whampoa

Hutchison dials the right numbers as profit soars

Conglomerate beats market estimates as globalisation and diversification help its profit jump 23pc in first half despite economic uncertainty

PUBLISHED : Thursday, 01 August, 2013, 6:42pm
UPDATED : Friday, 02 August, 2013, 5:30am

Globalisation and diversification helped tide Hutchison Whampoa over global economic uncertainty in the first half, with net profit beating market expectations to jump 23 per cent year on year to HK$12.4 billion.

"While uncertainty will remain a challenge for the second half, major economies are showing signs of stabilisation and gradual recovery," chairman Li Ka-shing said in a statement filed with the Hong Kong stock exchange yesterday. "I expect the group will continue to grow in the second half of 2013, barring material adverse developments in our major markets."

It is the first time in two decades that Li and Hutchison did not hold a press conference after the results.

Some 31 per cent of the earnings before interest and tax (ebit) was generated from Europe but ebit for the group overall grew 16 per cent to HK$29.89 billion.

The company has consistently outperformed its peers in the past months, Credit Suisse analyst Cusson Leung said in a report dated July 17. "We believe the advantage of a globally diversified conglomerate is paying off now."

Some 17 per cent of ebit came from Hong Kong, 18 per cent from the mainland, 14 per cent from Canada and 16 per cent from Asia, Australia and other areas. The remaining 4 per cent was from financial products.

As the largest port operator in the world, with 276 berths across the globe as of June, Hutchison saw a 2 per cent growth in container throughput to 37.9 million 20-feet equivalent units.

It said it expects the port business to perform steadily in the second half, with three berths to be added this year in China and Australia. Depreciation related to new projects and expansion, dragged down the port ebit by 5 per cent to HK$3.45 billion.

The company continued to bet successfully on its 3G operation in Europe through acquisitions in Austria and Ireland. In the first six months, its 3G users in Europe grew 9 per cent to 25.6 million. Ebit from the Europe 3G business jumped 35 per cent to HK$1.85 billion.

However, its 50 per cent-owned mobile service joint venture with Vodafone in Australia was still in the red and incurred HK$602 million in losses. Fortunately for Hutchison, the losses were offset by a HK$958 million one-off gain from disposal of Yesss in Austria and restructuring of three businesses related to the acquisition of Orange Austria.

Retail business ebit growth slowed down to 9 per cent to HK$4.32 billion as its duty-free operation at the Hong Kong International Airport ended in November. The contribution of retail to the group's overall earnings is set to fall when Hutchison completes the sale of supermarket chain ParknShop. Private-equity firm KKR and five other companies are said to be planning to bid for it.

Cheung Kong Infrastructure contributed HK$5.17 billion profit to the group, up 10 per cent from a year earlier. Husky Energy, 49 per cent owned by Hutchison, saw its earnings rise 12 per cent to C$1.14 billion (HK$8.6 billion).

Earnings per share of Hutchison was HK$2.91 from HK$2.37 while interim dividend per share increased to 60 HK cents from 55 HK cents a year earlier. Shares in the company inched up 0.17 per cent to HK$87.70 yesterday.