Li Ka-shing’s Hutchison Port Holdings Trust (HPH Trust) said the global external environment “continues to be challenging” as it reported a 6% decline in second quarter net profit.
HPH Trust, which has recently seen a new chief executive take the helm, made a profit of HKD 442.8m ($56.6m) for the three month period.
“Trade tensions between the US and China have heightened in recent months with new tit-for-tat tariffs imposed in the second quarter of 2019,” it said.
Meanwhile, it said trade protectionism, macro-economic and political uncertainties, including the slowing Chinese and EU economies and the yet-to-be-resolved Brexit from the EU, “threaten the recovery of global trade”.
HPH Trust said outbound cargoes to the US remained weak in the second quarter of 2019 and are expected to be volatile in the second half of 2019 as the US/China trade dispute continues.
“Given the uncertainties in the global trade outlook, HPH Trust management remains cautious about future cargo trends and will continue to adhere to cost discipline and efficiency improvements in order to face the challenges ahead,” it said.
HPH Trust said the situation was compounded by the mixed financial performance of major shipping lines in the first quarter of 2019 with some still operating at a loss.
“Coupled with the uncertainties in the global trade outlook and the expected increase in the fuel cost from using low-sulphur fuel with effect from 1 January 2020 as required by the IMO, it is anticipated that shipping lines will continue to drive cost efficiencies and promote fleet and capacity optimization,” HPH Trust said.
“The continued deployment of mega vessels will necessitate investment in port facilities and continuous process improvements by deep water port operators.”
HPH Trust owns interests in deep-water container port located in two of the world’s busiest container port cities by throughput – Kwai Tsing in Hong Kong and Shenzhen in China.
Other assets in the HPH Trust portfolio include the port in China’s Huizhou as well as certain port ancillary services and the economic benefits of river ports complementary to the deep-water container ports operated by HPH Trust.
