Hutchison Port Holdings Trust’s First Quarter Results Down


Revenue and other income for the quarter was HK$2,578.0 million, HK$173.8 million or 6.3% below last year. However, the restated % variance on revenue and other income was 1.7% below last year. Combined container throughput of HIT, COSCO-HIT and ACT (collectively “HPHT Kwai Tsing”) increased by 3.2% as compared to the same quarter in 2016, primarily due to higher transshipment cargoes.

The container throughput of YICT(d) decreased by 1.4% as compared to the same quarter in 2016, primarily due to weaker empty and transshipment cargoes partially compensated by the growth in US and EU cargoes.

The average revenue per TEU for Hong Kong was below last year mainly due to greater volume of concessions offered to certain liners. For China, the lower than last year’s average revenue per TEU is predominantly attributed to RMB depreciation.

Cost of services rendered was HK$918.5 million, HK$122.3 million or 11.8% below last year. However, the restated % variance on cost of services rendered was 4.2% below last year. The decrease was attributed to savings in operation costs due to improved resources’ allocation efficiencies, lower repairs and maintenance expenses, and RMB depreciation, but were partially offset by general cost inflations, including the increase in external contractors’ costs. Staff costs were HK$75.0 million, HK$4.7 million or 5.9% below last year.

Depreciation and amortisation was HK$735.9 million, HK$13.5 million or 1.9% above last year mainly due to the operational commencement of YICT Phase III Expansion South Berth and West Port Phase II in the early part of 2016. Other operating income was HK$2.5 million, HK$0.5 million or 25.0% above last year.


(a) HIT means Terminals 4, 6, 7 and two berths in Terminal 9, located at Kwai Tsing, Hong Kong.

(b) COSCO-HIT means Terminal 8 East, located at Kwai Tsing, Hong Kong.

(c) ACT means Terminal 8 West, located at Kwai Tsing, Hong Kong.

(d) YICT means Yantian International Container Terminals, located at Yantian, Shenzhen, PRC, which comprises Yantian International Container Terminals Phases I & II, Phase III & Phase III Expansion, and Shenzhen Yantian West Port Terminals Phases I & II.

8. Review of performance (Continued)

Other operating expenses were HK$142.1 million, HK$384.4 million or 158.6% below last year ’s net other operating income of HK$242.3 million which included the effect of the government rent and rates refund of HK$430.0 million received during the first quarter of 2016 by HIT. With the aforesaid, total operating expenses were HK$1,869.0 million, HK$270.4 million or 16.9% above last year.

As a result, the operating profit was HK$709.0 million, HK$444.2 million or 38.5% below last year.

Interest and other finance costs were HK$194.1 million, HK$25.4 million or 15.1% above last year, primarily due to higher HIBOR/ LIBOR applied on the bank loans’ interest rates.

Share of profits less losses after tax of associated companies was a loss of HK$29.2 million, HK$33.9 million or 721.3% below last year, mainly reflecting the share of HICT’s result following the completion of the acquisition by HPH Trust at the end of 2016.

Share of profits less losses after tax of joint ventures was HK$17.0 million, HK$4.6 million or 37.1% above last year, primarily due to better performances of COSCO-HIT and ACT following the co-management arrangement as throughput of HPHT Kwai Tsing was 3.2% above last year.

Taxation was HK$126.8 million, HK$80.6 million or 38.9% below last year, mainly due to lower profit and tax savings from YICT Phase I & II as it qualified as “High and New Technology Enterprise” in November 2016, which entitles YICT Phase I & II to a preferential corporate income tax from 2016 to 2018, but were partially offset by the increase of YICT Phase III Expansion and West Port Phase 1’s tax rates following the expiry of their tax exemption period.

Overall, profit and profit attributable to unitholders of HPH Trust was HK$375.9 million and HK$166.9 million respectively. Excluding HIT’s rent and rates refund in 2016, profit was HK$61.3 million or 14.0% below last year and profit attributable to unitholders of HPH Trust was HK$31.0 million or 15.7% below last year. With HIT’s rent and rates refund in 2016, profit and profit attributable to unitholders of HPH Trust was 52.7% and 69.9% below last year respectively.

Material changes in statements of financial position and statements of cash flows Please refer to footnotes of 1(b)(i) and 1(c).

Where a forecast, or a prospect statement, has been previously disclosed to unitholders, any variance between it and the actual results.

No forecast statement for the financial year 2017 has been disclosed.

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 quarter and the next 12 months.

Outbound cargoes to the US continued to grow in the first quarter of 2017 driven by the moderate expansion in economic activity in the US with the support of strong employment data. However, there remains a high level of uncertainty over the domestic and global ramifications on the US economy and trade in 2017 as the new US administration commences the roll out of its fiscal policies and initiatives.

The European economic activity is gaining momentum and outbound cargoes to Europe showed a mild uplift in the first quarter of 2017. Despite this, continued weak consumer sentiment and high unemployment rate are still plaguing the sustainability of Europe’s economic recovery and the pickup of the European trade in 2017.

In addition to the economic performances of the US and Europe, HPH Trust’s performance is also impacted by the outcomes of the structural consolidation within the container shipping industry and the consequent rationalisation of services. The co-management arrangement signed in December 2016 has enabled more efficient use of the facilities and manpower resources.

Due to adverse market conditions, including overcapacity and low freight rates in 2016, shipping lines will continue to deploy mega-vessels, reform their carrier alliances and expand the coverage of vessel-sharing schemes in 2017 to achieve economies of scale to improve efficiency, lower costs and enhance overall competitiveness. Against this setting, HPH Trust is well positioned to be the preferred port of call given its natural deep-water channels and unparalleled mega-vessel handling capabilities.

The roll-out of the co-management arrangement is progressing well. HPH Trust is confident to deliver the expected cost and operational synergies in 2017.

Given the uncertainty around global trade outlook, management remains cautious on the expected cargo volume for 2017 and will continue to focus on better cost control through improvements in productivity and efficiency.

Given its strong fundamentals, the Trustee-Manager is confident that HPH Trust is well-equipped to respond to external developments and challenges.

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Source: Hutchison Port Holdings

Source from : Port News