China Merchants Holdings (International) Co expects slower growth in container throughput in the second half compared with a year ago as growth in major economies ease, the port operator said on Tuesday after reporting strong interim operating results.

The blue chip company reported a recurrent profit of HK$2.4 billion ($300 million) in the first half, up 27 percent compared with a year ago, as rising shipments of mainland-made goods boosted throughput volume at its ports.

However, the company is a bit cautious about the outlook for its port operations in the second half as major economies such as the US and Europe have shown signs of a slowdown.

The company's container handling business will post better performance in the second half compared with the first half due to seasonal factors. But the growth will be likely weaker when compared with the same period a year ago, Vice-Chairman Li Jianhong told a press briefing in Hong Kong on Tuesday.

Growth may wane in the second half as rising job concerns slow spending overseas, said JPMorgan Chase & Co analyst Karen Li.

"China Merchants may be affected by weak demand in Western countries caused by economic uncertainties," she said. "The company's export focus also means volumes may grow more slowly than the industry average this year as domestic trade has been growing quickly."

China Merchants will focus on developing domestic trade-related port business to offset the impact of weakening external demand, Li said.

Including one-off gains of HK$1.37 billion, the company posted a net profit of HK$3.9 billion, more than doubling the HK$1.93 billion of a year earlier.

The one-off gains predominately derived from a revaluation of the company's shares in Shanghai International Port (Group) Co.

China Merchants, the owner of stakes in ports moving about a third of the mainland's containers, declared an interim dividend of 30 HK cents per share, compared with 25 HK cents a year earlier.

China Merchants' ports, which include facilities in Shanghai, Shenzhen and Ningbo, boosted first-half volumes 11 percent to 27.6 million containers. Commodity volumes rose 19 percent to 160.5 million metric tons.

Cargo volumes at the mainland's major ports increased 13 percent to 4.4 billion metric tons in the first half, according to the Ministry of Transport. Sea harbors had a growth rate of 13 percent, while river ports' traffic jumped 14 percent.

China Merchants and partners signed a deal earlier this month to build and operate a container terminal in Colombo, Sri Lanka. The project may cost more than $500 million, making it the company's largest investment overseas.

China Daily - Bloomberg

(HK Edition 08/31/2011 page2)