HAECO Group reports first half-year results

The HAECO Group reported an attributable profit of HK$348m for the first six months of 2017. This compares with a profit of HK$1,111m for the equivalent period in 2016, which included a gain of HK$805m on disposal of the interest of Hong Kong Aero Engine Services Limited (HAESL) in Singapore Aero Engine Services Pte. Limited (SAESL). Earnings per share decreased by 68.7% to HK$2.09. Revenue increased by 4.3% to HK$7,405m. More airframe and line services work was done by HAECO in Hong Kong (HAECO Hong Kong) in the first half of 2017 than in the first half of 2016. The increase in airframe services work reflected higher demand and the deferral of some customers’ work from 2016. Line services benefited from more aircraft movements. HAECO ITM Limited recorded a higher profit, which reflected more repair business. The share of HAESL’s profit increased. The shareholding increased from 45% to 50%. More engines were overhauled and more work was done per engine.
HAECO USA Holdings recorded a higher loss in the first half of 2017 than in the first half of 2016. This reflected lower demand for its airframe services, lower margins on seats sold and the completion of fewer interior reconfigurations. The results were also adversely affected by the non-recognition of deferred tax assets in respect of the first half of 2017 tax losses and lower than expected contributions from certain programmes (with efforts to improve efficiency not yet having borne fruit). The non-recognition of deferred tax assets reflects the loss of significant work from a major customer from August 2017.
The profit of Taikoo (Xiamen) Aircraft Engineering Company Limited (HAECO Xiamen) increased in the first half of 2017 compared with the first half of 2016. This principally reflected higher demand for its airframe services. The profit of Taikoo Engine Services (Xiamen) Company Limited (TEXL) increased, with more engine performance restorations and more component repair work. Taikoo (Xiamen) Landing Gear Services Company Limited (HAECO Landing Gear Services) incurred a smaller loss than in the first half of 2016. The overall contribution from the Group’s other activities in Mainland China improved. Overall, the HAECO Group’s adjusted profit for 2017 is expected to be below that of 2016.