(Bloomberg) — CK Hutchison Holdings Ltd. profit rose 15% last year as key retail and port operations bounced back from Covid-induced slowdowns, though uncertainty about global growth points to risks to a continued rebound.
The flagship company of billionaire Li Ka-shing’s CK Group reported net income of HK$33.5 billion ($4.3 billion) last year, according to a statement Thursday. While up from a year earlier, it’s still down 16% from the pre-pandemic levels of 2019. The company also raised its full-year dividend to HK$2.66 a share from HK$2.31 a year earlier.
Hong Kong-based CK Hutchison’s sprawling businesses spans ports to retail and telecommunications and it operates in major markets including mainland China, the U.K., Australia and Canada. While the widely-distributed portfolio has helped the group hedge against regional risks, it also leaves it particularly exposed to global black swan events.
Profit tumbled in 2020 as the pandemic battered business. Risks to the world’s outlook this year include the fallout of Russia’s invasion of Ukraine, which has sparked disruptions to global logistics, as well as a flareup of virus cases in China that’s already prompted lockdowns in some areas where CK Hutchison operates.
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“The outlook for the global economy is still uncertain,” Chairman Victor Li said in a statement. “The emergence of new Covid-19 variants, elevated inflation concerns and expected tightening of monetary policies have increased the difficulty in predicting both the global growth trajectory and the growth trajectories for the world’s major economies for 2022.”
Li also warned that supply chain disruptions that have roiled global trade throughout the pandemic are unlikely to ease in the short-term.
“We expect gradual easing of the supply chain disruptions in the second half of 2022, but the port congestions and the high yard density are likely to continue for some time,” he said at a briefing after the release of earnings. Even during disruptions, the company benefits from the higher storage incomes it earns from containers that need to stay in its yards longer, he said.
While CK Hutchison’s ports and retail divisions helped the overall recovery in profit, the operating environment for telecommunications remains challenging, especially in Italy.
The company expects the 3.7-billion-euro sale of its British mobile masts to Cellnex Telecom SA to be completed by late in the second quarter or early in the third quarter, finance director Frank Sixt said at the briefing. The group will then conduct more share buybacks once the deal is closed, according to Li. The deal is part of a larger sale of its European mobile towers to Cellnex for a total of 10 billion euros.
The group is also exploring more acquisitions for its infrastructure arm. And while CK Group has received interest in acquiring its stakes in UK Power Networks Holdings, it doesn’t mean the group would sell, Li said.
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CK Hutchison’s sister firm, CK Asset Holdings Ltd., reported HK$21.2 billion in net income for last year, up from HK$16.3 billion a year before, according to a separate filing Thursday. It raised full-year dividend to HK$2.20 per share from HK$1.80 in 2020.
The property developer is set to get a boost from the sale of the UBS headquarters in London. The sale could reduce CK Asset’s debt ratio to 5%, Edmond Ip, deputy managing director at CK Asset, said at the briefing.
Back at home, CK Asset’s property sales, shopping malls and hotels have faced disruptions as Hong Kong deploys strict social distancing measures to quell a record virus outbreak. Prior to the city’s most recent wave of infections, Citigroup Inc. predicted home prices to drop by as much as 10% this year.
Still, CK Asset said it is confident about the long-term prospects for Hong Kong’s housing market due to solid demand and the potential for increased supply.
(Updates to add comments, details throughout.)
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