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Hutchison profit surges sevenfold on one-time gain

By Donny Kwok and Joy Leung

HONG KONG (Reuters) - Hutchison Whampoa Ltd <0013.HK>, Hong Kong billionaire Li Ka-shing's flagship ports-to-telecommunications company, reported a more than sevenfold rise in first-half net profit, helped by a hefty one-off gain from the spin-off of its port assets.

But the earnings lagged market forecast as analysts said Hutchison's 3G business was not recovering as fast as expected.

"It was a little disappointing. The market had been too optimistic about its earnings," said Alex Wong, a director at Ample Finance Group.

"It may be because of the 3G business, which the market had hoped would be a big help to its earnings."

Hutchison, whose businesses include telecommunications operator 3 Group and Watsons retail stores, reported net profit of HK$46.3 billion ($5.95 billion), including a one-off gain of HK$44.3 billion for the first half.

That compared with net profit of HK$6.32 billion for the first half of 2010 but lagged an average forecast of HK$51.2 billion from 10 analysts surveyed by Thomson Reuters.

Hutchison said it booked an exceptional gain of HK$44.29 billion in the first half from the Singapore initial public offering of its southern China ports assets -- Hutchison Port Holdings Trust .

Its 3G arm posted an EBIT (earnings before interest and tax) of HK$767 million during the first half against an LBIT (loss before interest and tax) of HK$2 billion a year ago. Hutchison said its 3G customer base totals over 30.2 million worldwide, up only 3 percent in the first half.

POSITIONED FOR GROWTH?

Stronger performances of its energy, retail, property and infrastructure combined to increase its first half earnings, analysts said.

"With core businesses performing well and generating cash, a stronger balance sheet and liquidity, the group is well positioned for continued growth and will continue to invest and expand its core businesses," Chairman Li Ka-shing said.

"The group's diversified portfolio of businesses worldwide will continue to perform favorably. I remain confident in the group's outlook and development in the second half of 2011," he said in a statement.

Hutchison, an associate of Cheung Kong (Holdings) Ltd <0001.HK>, declared an interim dividend of HK$0.55 per share, up from an interim dividend of HK$0.51 per share that it has been distributing since 2000.

Hutchison's third-generation (3G) telecommunications business, which had been losing money over the past decade but broke even in the second half of 2010, recovered further this year. Hutchison said it was expected to contribute to the conglomerate's profits in the second half of 2011.

Hutchison's telecoms business 3 Group includes 3G network operations in Britain, Italy and Australia, among other countries.

It competes with Britain's biggest mobile operator, Everything Everywhere -- a joint venture of France Telecom SA's Orange and Deutsche Telekom AG's T-Mobile. It also competes with Telefonica SA's O2 and Vodafone Group Plc .

HUSKY AND CKI BOOST EARNINGS

Hutchison's earnings were boosted by sharply higher contribution from its infrastructure investment arm Cheung Kong Infrastructure Holdings (CKI) <1038.HK> and oil and gas unit Husky Energy Inc .

Husky last week reported a higher-than-expected second-quarter profit. It earned C$669 million ($709.0 million) in the second quarter compared with C$179 million a year earlier.

Last week, CKI posted a 96 percent rise in its first half net profit, beating expectations, after stellar gains in its newly acquired UK operations.

Hutchison's retail, and property and hotels divisions each saw their EBIT grow 25 percent year on year in the first half, while its ports division registered an expected 20 percent drop in EBIT as a result of the spin-off of Hutchison Port Holdings.

Hutchison shares ended 0.9 percent lower on Thursday ahead of the results in a Hong Kong market <.HSI> down 0.5 percent. Cheung Kong eased 0.08 percent.

Property developer Cheung Kong (Holdings) Ltd <0001.HK>, which holds a controlling stake in Hutchison, posted a 169 percent rise in first-half profit to HK$33.26 billion, just beating an average forecast of HK$31.2 billion.

(Additional reporting by Chyenyee Lee; Editing by Charlie Zhu)

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