MTR Corp profits drop to HK$4.64 billion as income from Shenzhen project drops off
Rail operator reports dip in revenue to HK$26.37 billion, but remains optimistic on outlook for second half of the year
Amid an unfolding construction scandal, MTR Corporation revealed on Thursday its underlying profit dropped 20.5 per cent to HK$4.64 billion (US$591 million) in the first six months of this year under the weight of lower property income.
The train services operator said revenue dipped 12.1 per cent to HK$26.37 billion, as the HK$6.84 billion generated in the same period last year from Tiara, the residential and commercial project in Shenzhen, was not repeated this time around.
On the plus side, the city’s strong economic health had helped lift passenger numbers 2.1 per cent to 5.8 million per weekday in the first half of 2018.
“If the economic growth and the retail sector continue to perform well in the second half of this year, our Hong Kong businesses … will be benefited,” said departing CEO Lincoln Leong Kwok-kuen.
In a rare expression of his own personal feelings, Leong expressed gratitude to the MTR staff members at a briefing on Thursday, two days after announcing he would retire prematurely to be accountable for the construction scandal over the HK$97.1 billion Sha Tin to Central rail line.
Four other senior members of staff – projects director Philco Wong Nai-keung, three other general managers of the project – Lee Tsz-man, Jason Wong Chi-ching and Aidan Rooney, also held accountability and left the company immediately on Tuesday.
The government, which owns 75 per cent of the corporation, said on Tuesday it had lost faith in the top management of the project after discovering contradicting evidence in the company’s reports over the substandard work of the project.
It ordered the company to kick out the managers in question, which resulted in four immediate departures and Leong’s premature retirement. Chairman Frederick Ma Si-hang will remain at the helm until a new chief executive officer is hired.
Leong apologised over the scandal again, and thanked the departing executives.
“They have finished a lot of programmes over the years and made a lot of contribution. I sincerely thank them,” he said.
He called all his staff “heroes of MTR Corp”, saying it was not easy to make good results in train services and other sectors when the company was facing big challenges over the past few months.
“We have learnt a number of lessons from the recent events with Sha Tin-Central link,” he said.
Leong said the company had tried to improve its management by establishing various groups, including a risk committee, after the 2014 cross-border express rail link saga.
In that year, then-CEO Jay Walder and projects director Chew Tai-chong resigned over their mishandling of delays and cost overruns at the cross-border express rail project.
“There were a number of investigations done,” Leong said. “After those investigations, the MTR had implemented all the recommendations from the experts that we had.”
The outgoing CEO said a number of activities were set up to enhance collaboration among colleagues.
“We will continue to review our culture and our processes and we will change to get even better to serve the people of Hong Kong,” he said.
Jacob Kam Chak-pui, managing director of operations and mainland business, revealed that he had met with about 500 workers in the firm on Wednesday, a day after he was appointed to oversee capital projects.
He vowed to fully cooperate with the government’s investigation to rebuild public confidence in the MTR Corp.