MTR Corp’s management failings see it take a 26 per cent beating as Hong Kong rail operator’s profits slump to HK$3.4 billion
- Cost of scandal-hit Sha Tin-Central link likely to balloon to almost HK$100 billion as firm sets aside extra HK$2 billion
- Rail operator says further challenges lie ahead with social unrest set to continue
Hong Kong’s embattled MTR Corporation took a beating from its botched management of a major railway project, revealing on Thursday its underlying profit slumped by 26 per cent to HK$3.4 billion in the first half of this year.
The lacklustre results came with the rail giant expecting more challenges ahead amid the heightened social unrest over the government’s controversial extradition bill, which has prompted protesters to cause serious disruptions to rail services over the past two months.
The rail operator, controlled by the government with 75 per cent shareholding, had already issued a profit warning as it made provisions of HK$2 billion for the scandal-hit Sha Tin-Central rail link for its reinforcement works and related expenses. The total cost of the city’s most expensive project will spiral to a record of at least HK$99.1 billion (US$12.6 billion).
However, MTR Corp’s CEO Jacob Kam Chak-pui said on Thursday that excluding the HK$2 billion, and another provision of HK$430 million for South Western Railway, a joint venture in Britain, the company’s underlying profit would have increased by 26 per cent as revenue grew 7 per cent to HK$28 billion.
He said the growth was mainly because of higher contributions from commercial and property rental and management business at the local railway stations.