Hong Kong (AFP) – Embattled Hong Kong conglomerate CK Hutchison Holdings, caught in a US-China spat over control of the Panama Canal, said on Thursday that profits fell 27 percent in 2024. CK Hutchison offloaded its global ports business outside China — including operations in the vital Central American canal — this month to a group led by giant asset manager BlackRock for $19 billion in cash. The parties expect to sign a “definitive agreement” by April 2 concerning the Panama Ports Company, which has operated two of the five ports at the canal since 1997 via a government concession. The deal came after weeks of pressure from US President Donald Trump, who refused to rule out a military invasion of Panama to “take back” the crucial waterway from alleged Chinese control.
Thursday’s results announcement made no mention of the BlackRock deal. “On the whole, the Group’s underlying operating results were relatively stable” last year despite a one-time loss related to its Vietnam telecommunications business, chairman Victor Li, son of billionaire founder Li Ka-shing, said in a filing with the Hong Kong Stock Exchange. Li said the operating environment for CK Hutchison businesses is “expected to be both volatile and unpredictable” this year, and that the group will “constrain capital spending and new investment and focus on stringent cash flow management.” The conglomerate said its “ports and related services” division saw an 11 percent jump in revenue to $5.8 billion. Earnings before interest, taxes, depreciation, and amortisation soared 19 percent year-on-year to $2.1 billion, the firm said. “There may be headwinds with supply chain disruptions anticipated in the early part of the year due to shipping lines transitioning into their new alliances, as well as ongoing geopolitical risk impacting global trade,” Li said as part of the ports division’s 2025 outlook.
Shares in CK Hutchison jumped more than 20 percent in Hong Kong after the ports deal was first announced on March 4. However, Beijing made its displeasure known last week through two government offices overseeing Hong Kong affairs that republished newspaper articles criticizing the deal as “spineless” and “betraying and selling out all Chinese people.” Hong Kong leader John Lee also said on Tuesday that concerns about the sale “deserve serious attention,” adding that the city will “handle it in accordance with the law and regulations.” CK Hutchison cancelled its post-earnings news conference on Thursday and has not responded to AFP enquiries. Bloomberg News, citing unidentified sources, has reported that senior Chinese leaders have ordered government agencies, including the State Administration for Market Regulation, to scrutinise the deal.
The conglomerate is registered in the Cayman Islands and the assets being sold are all outside China. Following years of diversification, operations in mainland China and Hong Kong made up just 12 percent of CK Hutchison revenue last year, according to Thursday’s results. Net income last year stood at $2.20 billion after the group recognised a one-time loss of $476 million related to its Vietnam telecommunication business “as the operating conditions continue to be under significant pressure.” CK Hutchison announced a full-year dividend of HK$2.20 per share on Thursday. The conglomerate had claimed to have “the world’s leading port network,” spanning 53 ports in 24 countries. However, in revenue terms, CK Hutchison’s ports division pales in comparison to its worldwide business interests in finance, retail, infrastructure, and telecoms.
Sister company CK Asset — the property developer arm in Li’s empire — said in a separate filing on Thursday that profit attributable to shareholders fell 20 percent last year. In Hong Kong, CK Hutchison is known for its founder, Li Ka-shing, the city’s wealthiest man nicknamed “Superman” for his business savvy. The 96-year-old enjoyed close ties with three generations of Chinese leaders, but that bonhomie faded after Xi Jinping took power. Chinese state media has criticized Li over the past decade for his apparent decision to divest from some Chinese markets and for supposedly showing sympathy to Hong Kong pro-democracy protesters in 2019.
© 2024 AFP
