CK HUTCHISON Holdings reported its steepest drop in profit since 2015 and struck a cautious tone for the year ahead as uneven growth and heightened geopolitical risks weigh on the conglomerate’s global operations.
The company, founded by Hong Kong billionaire Li Ka-shing, reported net income of HK$23.5 billion (S$4 billion), down 36 per cent from a year earlier though broadly in line with expectations.
Revenue rose to HK$462 billion from HK$457 billion a year earlier, it said in a statement on Thursday (Mar 21). It cut its full-year dividend by 14 per cent to HK$2.53 per share.
CK Hutchison, now led by Victor Li, said profit fell on mixed conditions across its ports to telecommunications and retail empire. While the US showed continued resilience, conditions in Europe, Hong Kong, and mainland China were challenging. That included persistently elevated inflation in major Western markets, energy price volatility and escalating geopolitical risks.
While conditions have shown signs of picking up, including an easing in inflation in the second half and improvement in trade flows, “2024 remains fraught with uncertainties,” the company said.
“Global growth prospects are uneven and unbalanced and geopolitical risks remain heightened, particularly with the upcoming national elections in the US and in several major countries in which the group operates.”
The group reported a 14 per cent drop in earnings before interest, taxes, depreciation and amortisation for its ports division. It cited sluggish global demand across major economies, a decline in storage income and a slump in freight rates. The division expects moderate growth in volume and earnings in 2024 on signs of a pick up in demand.
While the company has had to contend with strengthening global headwinds, short-term catalysts such as asset sales also remain lacking.
Last month, it cancelled the sale of a majority stake in its Italian unit Wind Tre’s mobile and fixed network – a deal that had set an enterprise value for the company of 3.4 billion euros (S$5 billion).
Meanwhile, a plan to merge CK Hutchison’s UK mobile operator Three with Vodafone Group’s unit in the country is currently being reviewed by Britain’s antitrust watchdog, which has previously voiced concerns about a reduction in the number of operators.
The deadline for the UK authority to release its findings for the first-stage review is Friday, and the group hasn’t received any additional information, co-managing director Canning Fok said at a briefing. The group would not find it unexpected if the authority decides to take the review to the second phase, and some previous successful cases in Europe involved a later-stage review, he said. The group expects the review to be completed before year-end if it proceeds further.
Separately, real estate arm CK Asset Holdings reported net income of HK$17.34 billion, missing estimates. Higher interest rates and a softening economy weighed on property transactions in Hong Kong, where the market faces an oversupply of apartments despite recent tax reductions by the government.
CK Asset’s coming projects will likely have fierce competition from other developers, which are pricing homes at discounts to lure buyers. BLOOMBERG
