MTR net profit crashes by over a third

A weaker property market inflicts a 33% plunge in net profit on MTR Corporation, Ltd during the first half.

MTR runs the Hong Kong MTR metro system and is also a major property developer and landlord in the city. Net profit for the first half plummeted 33% to HK$5.9 billion from HK$8.8 billion a year earlier due to smaller revaluation gains.

MTR posted a revaluation gain of HK$1.74 billion, sharply lower than the revaluation gain of HK$4.41 billion a year earlier.

Underlying profit, which excludes investment property revaluations and deferred tax, fell to HK$4.12 billion in the first half from HK$4.4 billion a year earlier.

Profit also was hammered by a 4.6% increase in total operating costs to HK$10.6 billion as expenses at MTR’s Hong Kong transport operations increased. Revenues rose 6.1% to HK$17.2 billion from HK$16.2 billion due to 4.5% growth in passenger traffic. Fare revenues improved 8.2%.

Earnings have been hurt by a slowdown in China’s economy and weaker demand for apartments in Hong Kong where home prices once rose more than 80%.

Income from property development decreased to HK$627 million from HK$1.45 billion after MTR booked sales at projects including Festival City, a development above a railway station in the city's north, the company said.