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Hutchison Whampoa chairman Li Ka-shing clasps his hands during a conference. Photo: Bloomberg

Update | Hutchison Whampoa’s full year net soars, but headwinds seen in 2014

“Some of our businesses encountered increasing headwinds in the second half of 2014 with increased currency volatility, (the) slow property market in mainland China and a sharp plunge in crude oil prices” Li Ka-shing

Billionaire Li Ka-shing’s Hutchison Whampoa 2014 full year net profit jumped 116 per cent year on year to HK$67.2 billion, buoyed by gains in property revaluation and disposal of investments.

But if one excludes one-time gains, the recurring net profit grew by just 3 per cent to HK$32 billion, falling short of analysts’ expectations it would stand at HK$32.8 billion.

Revenue rose 2 per cent from a year ago to HK$421.5 billion. Hutchison, soon to be renamed as CK Hutchison to house all of Li’s non-property assets, fetched HK$25.1 billion in marking property assets to market value, and HK$10billion in divestments.

“Some of our businesses encountered increasing headwinds in the second half of 2014 with increased currency volatility, (the) slow property market in mainland China and a sharp plunge in crude oil prices,” said Li, the chairman of the company.

The tycoon reiterated that the company will adhere to the principle of “advancing with stability” and make prudent investment decisions based on the long term interests of shareholders. The company should hit its business objectives, taking into consideration the severe decline in oil prices.

“We pushed as far as we could – argued our way out in every reporting period – to resist adjusting property value, because we think it would introduce volatility [to earnings],” group finance director Frank J Sixt told a press briefing. “The current valuation is still very conservative, compared to other property companies.”

Business in UK and Europe altogether contributed 43 per cent earnings before interest, tax, depreciation and amortisation (Ebidta), further widening the gap between the share of Hong Kong and mainland operations, which accounted for 26 per cent Ebidta. A slew of acquisitions, notably the £10.25billion (HK$119.4 billion) deal to buy O2 in Britain, and the decision to move corporate registration to the Cayman Islands, have rekindled speculations that the Hong Kong tycoon is leaving his home base.

When asked about Europe’s attraction, Group managing director Canning Fok said: “We are one of the very few companies in Asia who have successfully expanded outside of the hometown. So we are able to see lots of opportunities that others may not see in this side of the world.”

Infrastructure was the best performing sector of Hutchison, with Cheung Kong Infrastructure’s profit growing 173 per cent. Other than telecoms, retail, infrastructure, and aircraft leasing were named by Fok as “exciting” sectors.

“But I hate to say which geographical location is attractive. I prefer to think the transactions we did this and last year were very attractive and accretive to our shareholders.”

Fok reiterated Hutchison’s enthusiasm in in-market consolidation in the telecoms sector. The O2 acquisition will see the Hong Kong company ascend to the biggest mobile operator in Britain with 41 per cent market share if competition authorities give it the green light. “All of our three deals in Australia, Ireland, and Austria were approved. There have been enough precedents we can work on [to get the approval],” he said.

Performance of the telecom business was mixed with 3 Group Europe’s Ebidta growing 42 per cent but Hutchison Asia Telecommunications suffering a loss before interest and tax of HK$1.5 billion. Husky Energy, a unit of Hutchison, was adversely affected by the fall in oil prices to multi-year lows as its profit dropped 31 per cent.

Ports and retail businesses recorded stable growth in Ebidta, up 6 per cent and 16 per cent respectively.  

Property and the hotel sector, to be spun off into CK Property after the restructuring, took a hit with Ebidta down 29 per cent from 2013. “Today, the flour is more expensive than the bread,” said Fok, referring to the high land prices in the mainland. Hutchison declared a final dividend of HK$1.755 per share.

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