An electric pylon in Sydney. Operating profit for CLP's Australian business shot up 77 percent year-on-year to HK$1.3 billion. Ian Waldie / Bloomberg

Company earnings soar to HK$10.33b as overseas earnings provide a boost

CLP Holdings Limited, Hong Kong's largest power producer, posted a 26 percent jump in its net profit for 2010, fuelled by booming overseas businesses. Substantial gains on some one-off items also boosted the company's growth.

CLP reported a net profit of HK$10.33 billion for the year ended Dec 31, up 26.1 percent compared with 2009, while its revenue jumped by 15.3 percent year-on-year to HK$58.41 billion. This includes the HK$989 million of tax benefits accrued by its Australian business and the sale of a stake in the Anshun II power plant in Guizhou province in April last year for HK$356 million.

The company's EPS (earnings per share) stood at HK$4.29 at the end of 2010, 25 percent higher compared with HK$3.41 a year earlier. Taking into account the fourth quarter interim dividend of HK$0.92 per share, CLP's full-year dividend for 2010 stood at HK$2.48 per share.

The electricity business in Hong Kong continued to be the company's major revenue contributor, with an operating profit of HK$6.13 billion, up 3 percent from a year earlier. Local electricity sales climbed by 2 percent to 30,929 gigawatt hours in 2010, compared with 2009.

"Hong Kong is a mature business," Chief Executive Officer Andrew Brandler said Thursday at a media briefing. Compared with overseas businesses the company is committed to expanding, Hong Kong's business will be one of "low growth" going forward, the CEO added.

In the near term, securing long term gas supply will be the top priority for CLP's operations in Hong Kong as its existing gas supply enters into its final stages with production likely to become less stable, according to Betty Yuen, vice chairman of CLP Power Hong Kong Limited.

Meanwhile, operating profit for CLP's Australian business shot up 77 percent year-on-year to HK$1.3 billion on improved margins in both the electricity and gas retail businesses. The higher average exchange rate of the Australian dollar has also helped.

In December, CLP agreed to buy several electricity assets from the New South Wales government for A$2.035 billion. The acquisition, expected to be completed in March this year, will double the number of customers CLP currently has in Australia to around 2.75 million, said Yuen.

However, the company's business in India was much less upbeat throughout 2010, with operating profit dropping by 68 percent year-on-year to HK$141 million due to an unfavorable exchange rate and fair value loss on its hedging instruments, Yuen noted. Of the HK$68 million net fair value loss on hedges, HK$56 million was due to fair value loss on US dollar loan-related swaps which were arranged with the banks in 2010.

Looking ahead, Brandler said CLP's India operations will continue to invest in its wind portfolio there, which suffered from project delays and lower wind resources at certain sites.

Meanwhile, CLP's mainland business registered a record high operating profit of HK$642 million for 2010, representing a year-on-year rise of 73 percent compared with 2009. Its coal-fired projects in Guangxi province in particular recorded strong figures, benefiting from rising electricity demand and a stable coal supply sourced from international markets.

"The group is in good shape," Brandler said, adding that the company will pursue steady growth although he doesn't expect to see "any dramatic change in profitability".

China Daily

(HK Edition 02/25/2011 page3)