Hutchison Port Holdings reports nine month results
The operating profit was HK$1,201.9 million, representing HK$124.7 million or 9.4% below last year for the quarter. Interest and other finance costs were HK$149.9 million, representing HK$23.4 million or 18.5% above last year for the quarter. This was mainly due to higher interest rate for YICT’s HK$2.8 billion bank loan refinanced in late 2011. Liquidity of Hong Kong dollars was extremely tight in China as compared to 2007 when the loan was first drawn down, despite YICT managed to refinance at a very competitive rate at the then loan market.
Share of profits less losses after tax of associated companies was HK$7.4 million, representing HK$2.7 million or 57.4% above last year for the quarter. This was mainly due to better performance of an associated company, resulting from an asset disposal gain.
Share of profits less losses after tax of jointly controlled entities was HK$39.2 million, representing HK$3.7 million or 8.6% below last year for the quarter. This was mainly due to timing difference in receiving the dividend by a jointly controlled entity.
Tax was HK$97.4 million, representing HK$54.0 million or 35.7% below last year for the quarter. This was mainly due to higher deferred tax credit and YICT’s tax provision written back after finalisation of 2011 profit tax.
Overall, the profit for the quarter was HK$1,001.2 million, representing HK$95.1 million or 8.7% below last year for the quarter. Profit attributable to unitholders of HPH Trust was HK$601.7 million, representing HK$106.7 million or 15.1% below last year for the quarter.
Material changes in statements of financial position and statements of cash flows
Commentary on performance against the Projection disclosed in the Prospectus for the quarter ended 30 September 2012 (Cont’d)
As a result, the operating profit was HK$1,201.9 million, representing HK$374.4 million, or 23.8% below the Projection for the quarter.
Interest and other finance costs were HK$149.9 million, representing HK$33.3 million or 18.2% below the Projection for the quarter. This was mainly due to lower interest rates than those projected for the US$3.0 billion bank loan of HIT and the HK$5.8 billion bank loans of YICT.
Share of profits less losses after tax of associated companies was HK$7.4 million, representing HK$3.7 million or 100% above the Projection for the quarter. This was mainly due to better performance of the tugboat operations of an associated company and an asset disposal gain in an associated company which was not projected.
Share of profits less losses after tax of jointly controlled entities was HK$39.2 million, representing HK$3.8 million or 10.7% above the Projection for the quarter, mainly due to higher net profit of COSCO-HIT(a).
Tax was HK$97.4 million, representing HK$88.1 million or 47.5% below the Projection for the quarter, mainly due to lower profit, higher tax credit utilised by YICT and YICT’s tax provision written back after finalisation of 2011 profit tax.
Overall, the profit for the quarter was HK$1,001.2 million, representing HK$245.5 million or 19.7% below the Projection for the quarter. The profit for the period ended 30 September 2012 was HK$2,592.0 million, representing HK$382.5 million or 12.9% below the Projection for the period.
Profit attributable to unitholders of HPH Trust for the quarter was HK$601.7 million, representing HK$182.3 million or 23.3% below the Projection for the quarter. Profit attributable to unitholders of HPH Trust for the period ended 30 September 2012 was HK$1,644.8 million, representing HK$251.1 million or 13.2% below the Projection for the period.
Commentary on the significant trends of the competitive conditions of the industry in which the Group operates and any known factors or events that may affect the Group in the next reporting period and the next 12 months
Global economy remains sluggish with slow growth in trade. The US economic recovery is gaining momentum and showing signs of healthiness. Its labor market continues to improve with September unemployment rate dropped below 8% for the first time since 2009. The US Federal Reserve is committed to propping up the US economy by announcing the third round of quantitative easing. The European Central Bank also launched its "Outright Monetary Transactions" bond-buying program to support the Euro. Despite this, the demand for manufacturing and consumer goods in Euro-zone is expected to remain soft due to rising unemployment and weak consumer sentiment. Emerging countries play a more significant role in driving the global recovery with their continued increase in economic heft. Transshipment along with trade routes such as the Far East, Africa, Central and South America and Oceania continue to expand and are expected to outperform those of the US and Europe.
China’s GDP rose by 7.6% in the second quarter of 2012, declining from 8.1% in the first quarter to its slackest pace in nearly three years. In addition to the official interest rate cuts in earlier months, the Chinese government approved infrastructure projects of over US$150 billion to support GDP growth. Further stimuli are expected in the coming months to bolster the export. China continues to be the key engine of global growth with Pearl River Delta region remaining a main cargo source and the gateway to the Guangdong Province trade catchment area. HPH Trust’s ports shall continue to benefit from China's growth.
Shipping lines improved their financial performance in the second quarter of 2012 due to increased freight rates and lower bunker costs during the period. They continue to reduce costs and achieve economies of scale by deploying more mega vessels, entering into more vessel sharing agreements and consolidating traffic at larger ports. All of these measures are expected to benefit HPH Trust’s ports given their superior infrastructure, natural deep water channels, long contiguous berths and scale of operations.
The Trustee-Manager is confident that HPH Trust will respond promptly and effectively to any challenges, given its strong fundamentals.