Li Ka Shing’s business empire rocked by impact of pandemic

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HONG KONG • CK Hutchison Holdings and CK Asset Holdings, the flagship companies of the founded by Hong Kong’s richest man Li Ka Shing, flagged a significant from the coronavirus .

Retail, telecommunications and port conglomerate CK Hutchison expects a 50 per cent plunge in retail profit in the first half. Retail will be “acceptable” in the second half as China and Europe reopen.

A summary of the outlook by the group’s co-managing director Canning Fok was handed out by the company after its annual shareholders’ meeting on Thursday.

CK Asset, the property arm of Mr Li’s empire, said in an exchange filing later on Thursday that it expects the impact of Covid-19 “could collectively result in a material reduction” in net income for the six months ending June 30.

The companies, now led by Mr Li’s elder son Victor, are grappling with the impact of the Covid-19 outbreak as economies around the world risk slipping into recession.

Volatility in the financial, currency and oil markets poses further challenges to the group, which has operations that extend from Asia to Europe to the Americas.

The firms’ home base of Hong Kong, meanwhile, has weathered a double whammy of pro-democracy protests and the global pandemic. Both have significantly crimped tourism to the Asian financial centre, and sent sectors like retail and hospitality into free fall.

CK Asset said it experienced a lower contribution from Hong Kong property sales in the first quarter, a negative contribution from hotel and pub operations, and a significant decline in market value of its holdings in listed real estate investment trusts.

CK Hutchison said its port business has seen a near 20 per cent profit drop so far this year, with handling throughput falling around 7 per cent to 8 per cent. Its retail units include supermarket chain ParkNShop, electronics store Fortress, health and beauty care chain Watsons and luxury perfumery ICI Paris.

“Every sector is enduring to survive in the current environment,” the junior Mr Li said at the shareholders’ meeting. “We are one of the most tenacious of all the companies in the world.”

One bright spot is the group’s telecommunications business, Mr Fok said. Most of CK Hutchison’s networks in Italy, Ireland and Austria are ready to be upgraded to the super-fast 5G networks, he said.

Shares in CK Hutchison slipped 0.8 per cent yesterday, bringing declines since January to about 25 per cent. CK Asset dropped 0.32 per cent to be down about 16 per cent in the year to date.

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