Hutchison Whampoa on Thursday announced a 19.26 per cent surge in net profit while demonstrating increased confidence in its newly launched third-generation (3G) mobile service. Chairman Li Ka-shing said his multi-billion dollar third-generation 3G start-up would, within a year, show 'promising prospects' and would be on target to achieve break even in three years. The blue-chip conglomerate beat the most bullish market estimate with earnings of HK$14.28 billion, reflecting growth in all areas of its core operating businesses. Parent Cheung Kong (Holdings) had a 22.46 per cent jump in profit, to HK$8.87 billion. Both declared an unchanged dividend. Hutchison's biggest earnings driver came from its ports, up 17.33 per cent to about HK$6.8 billion, or about 28 per cent of overall group's operating profit last year. The retail division recorded a 92 per cent growth to HK$1 billion in its retail and manufacturing arms, due to the acquisition of Dutch firm Kruidvat in August last year. In the past year both Hutchison and Cheung Kong have come under pressure from investors, largely due to doubts about its 3G technology and the start-up's business model. 'In a year you would not need to ask me how our 3G business has been doing,' Mr Li said. 'My team and I have great confidence in this business.' At the press conference, Mr Li three times repeated his written chairman's statement that Hutchison's 3G ventures would be able to demonstrate clearly their promising prospects and potential to contribute significantly to group growth within a year. But worry about the recent ?1 billion (about HK$12.14 billion) cash call from its British 3G subsidiary ahead of the launch raised doubts about commitments from its banks and strategic partners NTT DoCoMo and Dutch KPN Mobile. Group managing director Canning Fok Kin-ning said the new financial arrangement would enable Hutchison to reduce the peak funding of its British business to ?4.2 billion, from an original ?5.2 billion. Because of lower procurement and equipment costs, Hutchison could cut four billion euros (about HK$33.16 billion) from its funding by 2005. Mr Li said this would save up to 20 per cent of its previously announced capital commitment of US$16.7 billion, which would be about 70 per cent completed by the end of the year. Previously, Hutchison indicated it was on target to acquire one million users in each of the Italian and British mobile markets despite a late launch. Mr Li said this target was at least 50 per cent lower than the company's projection, jokingly threatening to end a big bonus award should his 3G teams fail to achieve break even in 2005. Hutchison started distributing handsets on March 15, and has signed up 90,000 3G subscribers, including 10,000 in Britain, 50,000 in Italy, and an additional 30,000 pre-paid customers in Italy. All would have handsets this month. Analysts waited to see more positive signs on its 3G venture. ING analyst Cusson Leung said: 'Hutchison is not just a 3G company, and yes, this set of results demonstrated a strong operating cash flow, but the market still assess the negative impact of its 3G business past 2004.' Deutsche Bank Securities analyst Emilie Chau said lower peak funding cost for its 3G venture should be a relief to investors. 'But at the end of the day, investors would look at how much they could achieve in subscribers, revenue and average revenue per user before they would re-look at Hutchison on 3G investment.' Mr Li said: 'All existing Hutchison core businesses will continue to perform well and will provide substantial recurring contributions.' Last year, it had a HK$1.52 billion exceptional profit, mainly from sales of minority stakes in Hong Kong and Shanghai ports.