Hong Kong company reporting season

HAECO’s 2016 net profit more than doubles on sale of Singapore aircraft engineering unit

Losses increase at troubled US unit

PUBLISHED : Tuesday, 14 March, 2017, 7:26pm
UPDATED : Wednesday, 15 March, 2017, 12:21am

Hong Kong Aircraft Engineering Company (HAECO) posted a 110 per cent rise in net profit in 2016, thanks primarily to a HK$805 million (US$103.7 million) gain from the sale of its interest in a Singaporean aircraft engineering company in June.

The aircraft engineering and maintenance group, just under three-quarters of which is owned by conglomerate Swire Pacific, posted net profit of HK$975 million for 2016 compared to HK$464 million in the previous year.

Nonetheless John Slosar, HAECO chairman, warned of an uncertain outlook for 2017.

“The prospects for the [HAECO] group’s different businesses in 2017 are mixed,” Slosar said in a statement to the Hong Kong stock exchange. Slosar is also chairman of Swire Pacific.

HAECO has operations in Hong Kong, Xiamen, and in the Americas. Swire had cited higher losses at HAECO Americas in a profit warning it issued in November.

HAECO Americas posted a loss of HK$238 million for 2016, excluding one-off items, a sizeable increase on 2015’s HK$158 million loss.

HAECO Hong Kong, HAECO Xiamen, and TEXL – the company’s Xiamen based engine overhaul facility, all reported net profits.

When adjusted to remove the one-off impact of the sale of SAESL (Singapore Aero Engine Services), and other one off charges, HAECO Group’s 2016 profit was HK$516 million, 8.2 per cent higher than in 2015.

Prior to its sale, the 20 per cent stake in SAESL had been owned by Hong Kong Aero Engine Services Limited (HAESL) in which HAECO holds a 45 per cent stake.

As part of the restructuring, HAECO increased its ownership of HAESL to 50 per cent.

Following the sale, a special dividend of HK$2.35 per share was paid on September 20, 2016. As part of Tuesday’s announcement, HAECO issued a second interim dividend of 92 HK cents per share.

With the addition of the company’s first interim dividend, this results in total dividends for the year of HK$3.90 per share and represents a total distribution of HK$649 million.

HAECO shares closed up 0.9 per cent in Hong Kong at HK$55.70 a share.

HAECO Hong Kong recorded a 16.2 per cent increase in adjusted profit for 2016 compared to 2015.

Slosar said that HAECO Hong Kong expected its results to be affected by deferral of airframe services work by some customers, but that demand for line services in Hong Kong was expected to be firm.