Hutchison badly hit by global business downturn

Hutchison Whampoa eported a massive 78% drop in net profit for the first half of the year.

The conglomerate, one of Hong Kong’s largest and controlled by Li Ka-shing, Asia's richest man, posted a profit of HK$10.2 billion for the January-June period, down from HK$46.3 billion year-on-year Last year's profit, however, were boosted by the spin-off its ports in Hong Kong and southern China that raised HK$37.2 billion.

Despite the disheartening numbers, Hutchison said its divisions continued to perform well despite deteriorating global economic conditions that affect many of the markets and sectors in which the company operates to varying degrees.

Hutchison said most of its divisions posted profits despite the dismal economic outlook in Europe, where many have large operations.

Li is confident that all the companies controlled by his family will grow in the next five years if global economic conditions do not deteriorate further.

"Unless there is (a) war or other huge unpredictable events happening in Europe, I am sure that the group's infrastructure, ports and telecommunication businesses will fare 100 percent better in the next five years," Li said.

"We exercise prudential management to guard (against) any unpredictability in the external macroeconomic environment," he said after announcing the interim results of his flagship companies, Cheung Kong (Holdings) Ltd (CKH) and Hutchison Whampoa Ltd (HWL). 

The net profit of CKH dove 54% to HK$15.4 billion from the HK$33.2 billion in the first half of 2011. On the other hand, earnings were boosted by a one-time gain of HK$18.6 billion, Cheung Kong said.

"With a net debt to net capital ratio of 6.1 percent as at June 30, CKH is poised to continue to bid for more land parcels in Hong Kong in the future. The company's land bank is sufficient for residential project development up to the next four years," Li said.

In July, CKH had sold nearly 7,000 residential flats in Hong Kong, Macao, Singapore and the mainland that contributed nearly HK$32.4 billion in cash to the company.
Li emphasized that the group will continue to invest in business projects in Hong Kong.

"If I could earn $100 overseas but only $80-90 in Hong Kong, I would still choose to invest in Hong Kong, as I love this place. I will consider Hong Kong as my priority choice in making investments."

HWL has operations in 53 countries and employs more than 260,000 people. One of the largest companies listed on the Hong Kong Stock Exchange. HWL is an international corporation with a diverse array of holdings that includes the world's biggest port and telecommunication operations. It is 49.97% owned by the Cheung Kong Group.