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Companies

CK Hutchison ekes out 2% profit growth with European push

Hong Kong conglomerate says telecom business safe from coronavirus

A man uses his phone in Hong Kong. Telecoms are expected to be "less affected" by the coronavirus pandemic, CK Hutchison Chairman Victor Li said.

HONG KONG -- Hong Kong conglomerate CK Group maintained earnings growth despite a difficult year, with strong performance in telecommunications and retail helping offset geopolitical headwinds, results Thursday show.

Its core unit CK Hutchison Holdings, which spans businesses including retail, telecoms, ports, energy and infrastructure globally, saw its net profit rise 2% to $39.83 billion Hong Kong dollars ($5.13 billion) for 2019, falling short of analysts' estimates of HK$40.84 billion, according to FactSet.

Another key unit, real estate developer CK Asset Holdings, beat consensus forecasts with an underlying profit of HK$28.73 billion, up 19% from a year earlier, despite challenges posed by the prolonged social unrest in Hong Kong.

CK Group attributed the profit growth to "well-executed financial strategies that materially reduced its debt financial costs."

"With various adversities and challenges in the current market conditions, the group's operations in the year ahead will inevitably be impacted," said Victor Li Tzar-kuoi, who took over as chairman after his father Li Ka-shing retired in 2018, in a company statement, referring to the coronavirus pandemic, oil prices slump and trade tensions.

Around half of CK Hutchison's revenue was generated in Europe in 2019, while only 18% was contributed by Hong Kong and mainland China markets. The Li family has been diversifying its businesses away from Hong Kong and China since Chinese President Xi Jinping took office in 2013.

Such a strategy has drawn ire from Beijing, with state media publishing commentaries condemning the company's decision to trim assets on the mainland. Li Ka-shing, the company's billionaire founder, also came under fire for his ambiguous stance in the Hong Kong protests.

Yet the conglomerate said it remains committed to its diversification strategy. "The group will continue to focus and rely on its key strengths of resilience, business and geographical diversities and strong financial fundamentals to deliver a solid and stable performance in 2020," Victor Li wrote in a company statement.

In a news conference after the results announcement, Li downplayed the impact of the novel coronavirus to its retail and telecom business in Europe. He said the group's pharmacies still operate normally despite the lockdowns, and sales have spiked as people hurried to purchase sanitary goods.

Meanwhile, its telecommunication businesses remain stable and are "expected to be less affected among core segments of the group," according to Li.

CK Hutchison announced a final dividend of HK$2.30 per share, unchanged from 2018.

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