Hutchison Whampoa Ltd. (13), billionaire Li Ka-shing’s biggest company, posted full-year profit that more than doubled after boosting earnings from U.K. utilities, Canadian oil production and cosmetics stores in China.
Net income rose to HK$56 billion ($7.2 billion) in 2011, from a restated HK$20.2 billion a year earlier, the Hong Kong- based company said today. Profit matched the HK$55.9 billion average of nine analysts’ estimates compiled by Bloomberg.
Investment returns from Li’s $9.2 billion takeover of power networks in southeast England in 2010, his biggest acquisition, and higher oil prices fueled earnings at Hutchison, which also booked one-time gains from sales of ports and property assets. The Hong Kong parent company forecast its 3 Group mobile-phone division in Europe and Australia will generate increased earnings this year.
“The 3G business is improving, and Hutchison (HUWA)’s ports and retail operations stand to benefit if there is a global economic recovery,” said Ben Kwong, chief operating officer at KGI Asia Ltd., a Hong Kong-based brokerage. Hutchison may make more acquisitions to strengthen its mobile-phone operations in Europe, he said.
Hutchison fell 0.2 percent to 7.665 euros in Frankfurt trading as of 1:15 p.m. local time, after the stock dropped 0.4 percent to HK$79.05 at the close of Hong Kong trading before the announcement. The stock has gained 22 percent this year, outperforming the benchmark Hang Seng Index, which has advanced 12 percent.
3 Group, Hutchison’s unit that offers 3G, or third- generation, mobile-phone services in seven markets in Europe and Australia, earned HK$1.5 billion before interest and tax last year, compared with HK$2.93 billion in 2010. The decline was “due to lower one-off gains,” Hutchison said.
The mobile-phone division posted its first annual profit in 2010, after reporting more than HK$157 billion of losses in the previous seven years.
3 Group will make “an improved earnings contribution” this year, Hutchison said.
In February, Hutchison agreed to buy Orange Austria in a deal valued at 1.3 billion euros ($1.7 billion) to expand its operations in the European country.
Will Be ‘Consolidator’
There are opportunities for consolidation in the phone industry in Europe, Hutchison Managing Director Canning Fok told reporters in Hong Kong today. “We will be the consolidator; we won’t be consolidated,” he said, without elaborating.
Hutchison, with investments in ports, telecommunications, retail, property and energy in more than 50 countries, said it increased revenue 12 percent to HK$233.7 billion in 2011.
Full-year profit at Cheung Kong Infrastructure Holdings Ltd. (1038), the roads and utilities arm of Hutchison, rose 54 percent to a record HK$7.7 billion. Cheung Kong led a group of Li- affiliated companies to buy the U.K. power networks of EDF SA (EDF) for 5.8 billion pounds ($9.2 billion) in October 2010. A year later, it acquired Northumbrian Water Group Plc (NWG), based in Durham, England, for 2.4 billion pounds.
“Infrastructure and Husky should be the main drivers,” Lorraine Tan, director of equity research at Standard & Poor’s in Singapore, said before the earnings announcement, referring to Hutchison’s Husky Energy Inc. (HSE) affiliate. Hutchison is expected to focus on further investments in utilities and may review acquisitions of phone assets in Europe, she said.
Husky, the Calgary, Alberta-based oil producer part-owned by Hutchison, said last month that full-year profit more than doubled on higher margins and increased production.
Profit included a HK$44.3 billion one-time gain from the spinoff of port assets in Hong Kong and southern China through the separate listing of Hutchison Port Holdings Trust (HPHT) in Singapore in March 2011, Hutchison said. The parent company also booked a profit from the 10.5 billion yuan ($1.7 billion) listing of the Hui Xian Real Estate Investment Trust (87001) in Hong Kong the same month.
Li, Hong Kong’s richest man, ranks 14th on the Bloomberg Billionaires Index with a net worth of $24.7 billion. Nicknamed “superman” by the Hong Kong media for his investing prowess, he opened a plastic flower factory after World War II. Li began focusing on Hong Kong real estate in 1967 after riots from China’s Cultural Revolution depressed prices.
To contact the reporter on this story: Mark Lee in Hong Kong at firstname.lastname@example.org.