Victor Li

Hong Kong’s CK Hutchison sees first-half profit rise in solid start for new chairman Victor Li

Company helped by favourable exchange rates for its overseas businesses, but warns of uncertainties in the second half of the year

PUBLISHED : Thursday, 02 August, 2018, 6:24pm
UPDATED : Thursday, 02 August, 2018, 11:12pm

Hong Kong conglomerate Cheung Kong Hutchison reported a 13 per cent rise in first-half profit, handing tycoon Victor Li Tzar-kuoi a solid start to his tenure as chairman after he officially took over from his famous father Li Ka-shing.

Net profit at the company, the flagship of the business empire and which has operations spanning infrastructure, telecommunications, retailing, ports and energy worldwide, was HK$18.02 billion (US$2.32 billion) for the first six months of the year, up from HK$15.92 billion in the same period a year earlier, and 3 per cent ahead of the HK$17.5 billion estimated by three analysts.

Favourable exchange rates helped the company, as most of its profits are earned abroad.

The younger Li took over in May after his father, who had built the business from nothing almost seven decades ago and who is Hong Kong’s richest man, stepped down at the age of 89. In his first chairman’s statement, Victor Li warned of uncertain times ahead.

“Volatility in currency, commodity and financial markets is expected to continue in the second half, as trade tensions are unlikely to ease off in the short term,” he said in the statement to Hong Kong’s stock exchange.

But he added that Hong Kong should benefit from mainland China’s policies to generate sustainable growth and resilient domestic demand, and the company would manage its finances and investments prudently amid the global volatility.

The board declared an interim dividend of 87 HK cents per share, up 11.5 per cent from 78 cents last year. The conglomerate’s property arm, CK Asset Holdings, also reported a rise in first-half profit.

CK Asset reports 20 per cent gain in profit for first half of 2018 in strong showing for new chairman Victor Li

The first-half net profit amounted to 46.2 per cent of the average full-year net profit estimate of HK$39 billion by 12 analysts polled by Bloomberg. They forecast its profit grow to HK$41.7 billion next year.

First-half earnings before interest and taxes (Ebit) at the infrastructure businesses – the group’s largest – grew 10.8 per cent year on year to HK$13.24 billion, making up 37.4 per cent of the total.

Ebit at the European telecommunications business, the second-largest contributor, was HK$7.49 billion, little changed from a year ago. A 2.45 billion euro (US$2.8 billion) acquisition of a 50 per cent stake in Amsterdam-based Veon’s Wind Tre mobile operator joint venture could boost earnings in the second half, CK Hutchison said.

Ebit from retailing, which is mainly health and beauty products, grew 14.5 per cent to HK$5.99 billion, while that of its ports businesses rose 6.7 per cent to HK$3.86 billion. Its Canadian oil and gas unit, Husky Energy, saw Ebit more than triple to HK$2.76 billion from HK$839 million as sharply higher oil prices offset a 9 per cent output fall.

CK Hutchison shares slid 2.4 per cent on Thursday, in line with a 2.2 per cent decline of the Hang Seng Index.