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Hutchison profit beats forecast as 3G recovers

Hutchison profit beats forecast as 3G recovers
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First Published: Tue, Mar 29 2011. 04 33 PM IST
Updated: Tue, Mar 29 2011. 04 33 PM IST
Hong Kong: Hutchison Whampoa Ltd, billionaire Li Ka-shing’s ports-to-telecoms flagship company, beat expectations with a 47% rise in 2010 earnings, driven in part by a turnaround in its long-struggling 3G-telecom arm.
Third generation (3G) telecom business, which has been losing money over the past decade, will be a profit contributor for the group from 2011, said Canning Fok, managing director of the conglomerate, which also invests in retail, hotels, energy and infrastructure sectors.
“The business will push the company forward from now on, instead of pulling back the firm,” Fok said the firm’s results briefing.
Chairman Li said he is upbeat about the group’s overall business prospect.
“All of our existing businesses will see organic growth. I am optimistic in the short, medium and long term,” Li said.
Hutchison’s 3G had been a drag on the firm’s overall business performance and its stock prices for much of the past decade.
But hopes of a turnaround of the 3G business have been lending support to the company’s share price in the past year. Its shares are up about 11% this year, outperforming an about 0.25% gain in the benchmark Hang Seng Index . The stock ended down 2.09% at HK$88.8 ahead of the company’s results announcement on Tuesday.
Hutchison, whose telecoms business includes third generation network operations in Britain, Italy, Australia and other countries, had said its 3G business would make a positive contribution to the group’s full-year EBIT after losses narrowed in the first half.
The company’s third-generation network operator 3 Group competes with Britain’s biggest mobile operator, Everything Everywhere - a joint venture of France Telecom’s Orange and Deutsche Telekom’s T-Mobile. It also competes with Telefonica’s O2 and Vodafone.
Analysts have also expected a strong performance from Hutchison’s ports and retail divisions -- including the Watsons retail stores.
Hutchison on Tuesday reported a net profit of HK$20.04 billion ($2.58 billion) for 2010. This was 47 percent higher than the restated profit of HK$13.63 billion for 2009, and HK$16.03 billion analysts had forecast for 2010.
Some analysts expect Hutchison may spin off its other businesses after listing its port assets -- Hutchison Port Holdings -- in Singapore earlier in March 2011.
Hutchison could also consider listing its retail operations, they say. The division spans personal care, health and beauty chains, luxury perfumeries and cosmetics retailing, supermarkets, consumer electronics, electrical appliances retail chains and airport retail concessions.
Hutchison is an associate of Cheung Kong (Holdings) Ltd, a property group which posted a profit of HK$26.48 billion in 2010, up 35% year on year.
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First Published: Tue, Mar 29 2011. 04 33 PM IST