MTR Earnings Hit By Scandal-plagued Link

The MTR Corporation has reported a 22 percent drop in interim earnings, due largely to a HK$2 billion impairment charge of the Shatin-to-Central Link.

The rail operator said on Thursday first-half profit stood at HK$5.5 billion.

In addition to the troubled link, the firm also made provisions of HK$430 million for a joint venture in the United Kingdom.

Total revenue grew 7.2 percent to more than 28 billion dollars, lifted by the opening of the high-speed rail link and an increase in train fares.

But profit from its train services fell, from more than HK$1.1 billion to HK$952 million.

Profit from Hong Kong property development came in at 898 million dollars - up from 158 million dollars.

Its station commercial business, such as advertising and shop rentals, generated 2.67 billion dollars in profit.

The company has declared an interim dividend of 25 cents per share.

CEO Jacob Kam insisted its business remained strong.

"Excluding the provisions, our recurrent profit and underlying profit would have increased by 13.8 percent and 26.4 percent (respectively), mainly because of higher contribution from station commercial and businesses outside of Hong Kong and the increase in property-development profit from sales of inventory," Kam said.

Just last month, the railway firm issued a profit warning – its first since its listing in 2000 – because of provisions for the Shatin-to-Central link and the UK joint venture.

As for the express rail link, the MTR Corporation said passenger numbers have fallen short of expectations.

It said it attracted 54,000 passengers a day in the first 10 months since the opening of the Hong Kong section last September, compared with 80,000 projected by the government.

Kam put on a brave face, insisting the high-speed rail link is becoming more popular among passengers.

"We actually see a steady increase in patronage," he said.

"We have extended the reach of our high-speed rail service, we have increased the direct access stations from 44 previously to 58, and we have increasing popularity of the service."