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Denise Tsang

Strong property contributions, stringent cost controls and lower interest expenses drove attributable profit at MTR Corp up 28.2 per cent to HK$1.35 billion for the first six months of the year.

The underground rail service-provider realised an HK$827 million profit on property developments, a 10.85 per cent jump from a year earlier.

Core train services saw a poor performance as analysts anticipated, with MTRC's share of the public transport market eroded by  competition.

Despite this, chairman Jack So Chak-kwong said yesterday the corporation would proceed with a 2.3 per cent fare rise on April 1 next year.

'We have continued to experience a challenging operating environment in the first six months of this year due to the relatively weak economy and continued strong competition in the transport market,' Mr So said.

During the first half, fare revenues including the four MTRC train lines and the Airport Express Line climbed 1 per cent to HK$2.79 billion.

MTRC's market share shrank to 23.3 per cent from 24.1 per cent previously.

'We hope the patronage would regain some ground later this year when the Quarry Bay congestion relief works is completed,' Mr So said.

An alternative interchange at the North Point station will ease crowds travelling between the Kwun Tong Line and Island Line.

Analysts also estimated the HK$21 billion Tseung Kwan O extension would give a much-needed boost to MTRC's patronage when it comes into service at the end of next year.

Net interest cost fell HK$149 million in the first half as a result of the lower interest regime.

Taking advantage of lower interest rates, MTRC arranged new financing of HK$5.35 billion mostly in Hong Kong dollars.

'We will be watchful on the interest regime in the second half and will do financing if necessary and according to market conditions,' Mr So said.

He said MTRC had squeezed operating costs by 1.8 per cent, with staff costs 3.1 per cent lower.

'We will try to minimise the number of new staff for the Tseung Kwan O extension by utilising existing staff and maximising productivity,' he said.

The effective cost control was translated into a 1.4 per cent improvement, to 54.6 per cent, in the operating profit margin of the company's railway services.

Analysis, Page 3



Property strength drives MTRC to $1.3b profit