Hutch beats forecasts but profits plummet


Li Ka-shing, Asia's richest businessman, controls Hutchison and Cheung Kong

Staff and wires

HONG KONG, China (CNN) -- Hong Kong conglomerate Hutchison Whampoa said on Thursday first half net profit fell 17.2 percent to HK$5.95 billion ($763 million), and announced plans to buy Dutch drugstore chain Kruidvat for 1.3 billion euros ($1.27 billion).

But Hutchison, controlled by billionaire Li Ka-shing, beat expectations. A survey of nine analysts by Reuters forecast profits at HK$4.78 billion for the half year to June 30.

Analysts were thrown off by the inclusion of a net one-time gain of HK$1.52 billion ($194.9 million) from the sale of equity interests in a number of its port operations. A write-back of a HK$395 million provision previously made on Hutchison Harbour Ring, a property investor and toymaker, also contributed to the gain.

However, Hutchison's net profit for the first half of 2001 had a similar one-time gain, of HK$1.9 billion, putting Hutchison's profit slide into perspective.

The company also recorded turnover of HK$33.32 billion ($4.27 billion), up 13.7 percent year-on-year from turnover of HK$29.31 billion for the first half of 2001.

Hutch bullish on 3G phones

SG Securities analyst Robert Sassoon told Reuters, "These results will only have a very momentary interest from the market, because I think the real focus is going to be on their 3G plans in Europe."

Hutchison added to its reputation as one of the most bullish investors in 3G mobile phones with its plan to purchase Kruidvat through its A.S. Watson subsidiary.

Although Hutchison plans to tap into the European health and beauty market, which it said has posted steady growth over the past three years, it is the company's plans in the UK that caught the eye of investors in London.

The company plans to use UK drugstore chain Superdrug, part of the Kruidvat group, to distribute its 3G mobile phones.

Shares in rival drugstore chain Boots fell 3.3 percent while Britain's biggest mobile phone retailer, Carphone Warehouse, saw its shares fall 1.3 percent in morning trading in London on news of Hutchison's intentions.

And chairman Li Ka-shing added that Dutch firm KPN Telecom's plans to sell its 15 percent stake in Hutchison's 3G mobile operations in the UK would have no impact on the business, but refused to comment on whether they would purchase KPN's stake.

Shares edge down before results

Shares in the company, which with a market capitalization of $30 billion is Asia's sixth largest outside Japan, ended down 0.45 percent on Thursday in Hong Kong.

Results for Cheung Kong Holdings, Li Ka-shing's property and flagship, were also released on the same day.

It earned HK$3.92 billion ($503 million) for the first half of the year, while its shares ended flat at HK$58.25 ahead of the announcement. (full story)

Hong Kong's benchmark Hang Seng Index edged up 0.21 percent to 10,424.00. (full story)