Haeco predicts tough times after profits drop 24pc
Hong Kong Aircraft Engineering Co (Haeco) reported a 24 per cent drop in net profit to HK$625 million for last year yesterday and predicts tough times for its airframe maintenance and engine overhaul business in the city this year due to a shortage of labour and weakening demand.
Haeco said last year's decline in net profit was mainly due to a shortage of skilled or semi-skilled labour in the city, where the unemployment rate is 3.1 per cent, which had led to a "significant reduction in capacity", and increased staff costs on the mainland and in Hong Kong. The effects of the labour shortage would be felt again this year, chairman Christopher Pratt said.
Since the training of workers takes time, Haeco has started to move some work from Hong Kong to sister companies in Xiamen, Fujian province.
Haeco's payroll expanded 17 per cent last year to HK$3 billion. Turnover rose 26.7 per cent to HK$7.4 billion, while earnings per share were HK$3.76. The company declared an interim dividend of HK$1.30 a share, taking the total to HK$2.10 a share, down from 2012's HK$2.88.
Profit from its Hong Kong airframe maintenance, line maintenance and component overhaul unit plummeted 78.5 per cent to HK$60 million, with airframe maintenance man-hours down 13.5 per cent.
Cathay Pacific Airways' early retirement programme for Boeing 747-400s led to falling demand for Rolls-Royce engine overhauls at Haeco's facilities in Tseung Kwan O, with profit dropping 15.5 per cent.
Management said it did not expect a substantial recovery until 2016, when its Trent XWB engine unit would start to generate revenue.
The only bright spot for last year was its mainland-based engine overhaul facility, Taikoo Engine Services (Xiamen), which recorded its first full year of profit.
