MTR Corp surprised the market yesterday by announcing a 1 per cent rise in net profit to $4.49 billion for last year, then warned of waning property earnings. The profit growth was spurred by a turnaround of the economy, which helped boost passenger numbers to a record and reduce the losses of its core rail services to $313 million from $980 million in 2003. The semi-privatised corporation, which counts on income from property development to fund rail investments, also benefited from a rapid upturn in the property market, which enabled it to reap a profit of $4.56 billion. 'To sum up 2004, we effectively captured economic growth and converted it into operational growth,' said chief executive Chow Chung-kwong. However, he then warned: 'Although the property contribution will continue to serve as a growth driver in the coming two to three years, the amount may not be as high as this year.' Earnings per share were 1.17 per cent lower at 84 cents, much better than the 18.82 per cent decrease to 69 cents expected from a Thomson First Call consensus. A final dividend of 28 cents per share was proposed, bringing the full-year payout to 42 cents, the same as in 2003. Operating five urban rail lines and the Airport Express rail services, MTR saw fare revenue jump 8.07 per cent to $5.93 billion last year. Buoyant economic growth helped boost non-fare revenue, including advertising, station commercial activities, telecommunications and consultancy services, 17.36 per cent to $1.31 billion. Shrugging off the havoc caused by the Sars outbreak in 2003, the five urban rail lines carried 833.6 million passengers last year, an increase of 8.3 per cent, while the Airport Express rail line recorded 17 per cent growth with 8.01 million passengers. However, analysts said the improved performance could spark renewed calls for lower train fares as legislators and the government attempted to introduce a regulatory regime to determine public transport fares. MTR has frozen train fares since 1997, even though it has been empowered with fare autonomy since it went public in 2000. Last year, growth of the corporation's property profit tapered off to 14.9 per cent as the previous figure was inflated by the value of 18 floors in Two International Finance Centre at Hong Kong Station. Mr Chow said that in the next two years, the MTR would recognise profits from phase three of the residential development at Olympic Station and the Lane shopping centre at Hang Hau Station. Taking advantage of developers' desire to replenish land banks, the corporation would put two phases of the Tseung Kwan O Dreamcity project up for tender in the second half of this year, property director Thomas Ho Hang-kwong said.