Strong growth in the AS Watson retail business that is due to list later this year drove a 20 per cent jump in profits at Hutchison Whampoa, the ports-to-telecoms conglomerate of Li Ka-shing, Asia’s richest man.
The retail business, which could be valued at more than $20bn if the listing goes ahead, stretches from western Europe to China and saw sales up 6 per cent and earnings up 9 per cent in 2013 over the previous year in spite of difficult conditions in Europe.
Hutchison’s full-year net profit totalled HK$31bn ($4bn), up from a revised HK$26bn a year earlier, the company said on Friday.
The telecoms business also saw strong growth driven by Austria, where 3 Group, the European mobile division, bought Orange Austria in a €1.3bn deal last year.
The extra profits from the European telecoms business helped earnings before interest and tax from the region overtake those from Hong Kong and China for the first time. Mr Li has been rebalancing the group’s investments away from China and towards Europe, leading some in Hong Kong to fret that he is selling out of his home city – a claim that he has denied several times.
Hutchison repeated its statements that the AS Watson business was under strategic review to maximise the value and future growth of the business, but it added the French health and beauty chain Marionnaud would not be considered for initial public offering.
“This strategic review process may include considering the possibility of public offerings [while retaining control] in all or some of the retail businesses in appropriate markets,” it said.
On the ports side, revenue and earnings were flat, but the company said the outlook was improving. “Continuing economic recovery in the US and Europe, combined with the mainland’s commitment to stability, are providing a constructive outlook for the sector in 2014. Consequently, the division is expected to grow volumes during the year.”
Mr Li’s other big business, property group Cheung Kong – which owns a large stake in Hutchison – also reported annual results on Friday, saying net income hit HK$35bn, but gave an uncertain outlook for the year ahead.
Many analysts expected declines of up to 30 per cent in Hong Kong property prices this year as government policies to cool the housing market and curb foreign speculators, mainly Chinese buyers, take effect.
“It is expected that market conditions will continue to be subject to the development of housing policies, and our strategy is to be responsive to these developments,” Cheung Kong said.
Cheung Kong shares rose 2 per cent to HK$123, while Hutchison shares were also 2 per cent higher at HK$105.90.