Hutchison Whampoa’s profits rise 11% to USD1.85 billion, despite 3G losses

24 Mar 2006

Hong Kong-owned conglomerate Hutchison Whampoa yesterday reported an 11% rise in full-year 2005 net profit, driven by one-off gains and stronger earnings in its ports and energy operations, which made up for losses at its 3G mobile operations. The group posted net income of HKD14.34 billion (USD1.85 billion) for the year ended 31 December, up from a restated 2004 net profit of HKD12.98 billion (USD1.67 billion). Property revaluation and one-off gains counterbalanced the costly performance of its 3G mobile operations, which recorded an earnings before interest and tax (EBIT) loss of HKD26.88 billion (USD3.46 billion); the figure narrowed from HKD38.45 billion following exceptional items in 2004. EBIT from established businesses, excluding gains from property revaluation and asset disposal, rose 17% to HKD38.51 billion, compared with HKD33.03 billion the year before. 2005 revenues rose 33% year-on-year to HKD241.86 billion, up from HKD181.8 billion the previous year. Hutchison reported total exceptional gains of HKD25.12 billion, with one-off gains including the sale of a 19.3% stake in Hutchison Telecommunications International to Egypt’s Orascom Telecom Holding. Other exceptionals included non-cash accounting gains from a buyout of Hutchison Global Communications, and a repurchase of a stake in Hutchison 3 UK for a lower price than it sold the holding for. Hutchison’s chairman, billionaire Li Ka-shing, said: ‘With these encouraging economic trends, I am confident that our group’s businesses will continue to perform well in 2006,’ adding that the company was under no pressure to list its H3G Italia unit. Mobile ARPU came to GBP34.51 (USD60.14) in the United Kingdom and Ireland, whilst the Italian unit registered lower ARPU of EUR34.87 (USD42.01). Hutchison said H3G UK achieved positive earnings before interest, taxes, depreciation and amortization (EBITDA) on a monthly basis in December 2005. ‘As the 3 Group moves to becoming a net cash flow contributor to the group, improved earnings performance will follow,’ Li said.