HPH Trust’s profits inch up 2.9% YoY to $295.3m

Thanks to improved cost management.

Hutchison Port Holdings Trust (HPHT)’s improvements to cost management paid off as core net profit after tax attributable to unitholders for FY15 came in at around HK$1.61b, or about $295.3m, inching up 2.9% YoY from FY14’s HK$1.56b.

According to a report by OCBC, revenue was down 0.1% YoY to about HK$12.61b, bolstered by tariff increases over the year.

Meanwhile, throughput weakness at Hong Kong terminals persisted. Overall FY15 container throughput stayed flat, dipping 1.4% YoY. Combined throughput at Hong Kong International Terminals (HIT), COSCO-HIT Terminals (CHT), and Asia Container Terminals (ACT) dropped 6.4% YoY to 11.8m TEU. Compared to the 11.5% throughput volumes at the Yantian International Container Terminals (YICT) stayed robust, climbing 4.2% YoY to 12.2m TEU.

OCBC noted that the addition of mega-vessels to fleets, use of vessel-sharing schemes, and formation of shipping alliances are expected to weigh on HK throughput in 1H16 as port usage is rationalized.

Moreover, HPHT management has expressed that outbound cargoes to Europe are giving indications of a mild recovery but the current yuan devaluation has pushed Chinese exporters to put orders on hold until the situation stabilizes. OCBC estimates that with the subdued industry conditions, HPHT’s tariff hikes for the rest of its clients will likely average 3%.

Looking forward, HPHT’s performance is expected to wane for 1H16 as EU cargo trends recover slowly, and shipping line alliances lead to resource rationalization.