SINGAPORE (Oct 26): The trustee-manager of Hutchison Port Holdings Trust (HPH Trust) reported 3Q18 earnings ended Sept of HK$239.5 million ($42.3 million), 11% lower than last year.

Revenue and other income for the quarter came in at HK$3,026.6 million, 6.1% below last year.

Combined container throughput of Hongkong International Terminals (HIT), COSCO-HIT and ACT (Asia Container Terminals) -- collectively known as HPHT Kwai Tsing -- decreased by 16.7% as compared to the same quarter in 2017, primarily due to the decrease in transshipment cargoes.

The container throughput of Yantian International Container Terminals (YICT) was comparable to last year, primarily driven by the decrease in empty cargoes, but largely offset by increase in transshipment cargoes.

Average revenue per TEU for Hong Kong was above last year, mainly attributed to the effect of retrospective adjustment made to certain liners following finalisation of tariff negotiations included in the quarter last year and decreased transshipment mix.

For China, the average revenue per TEU was below last year, primarily attributed to Renminbi (RMB) depreciation and increased transshipment mix.

Cost of services rendered was HK$1,016.9 million, 7.7% below last year. The decrease was attributed to lower throughput, savings arising from cost saving initiatives and RMB depreciation.

Depreciation and amortisation was HK$763.9 million, comparable to last year. Other operating income trebled to HK$17.5 million largely due to the timing difference on 2018 dividend income from River Ports Economic Benefits.

Other operating expenses were HK$139.7 million, 2.2% above last year.

As a result, total operating profit was HK$1,052.3 million, 8.9% below last year.

No distribution has been recommended for the current financial quarter.

Looking ahead, the trustee-manager of HPH Trust says global trade prospects for 2018 and beyond face mounting uncertainty, particularly in consequence of escalating trade tensions and disputes between the United States and both China and the European Union and uncertainty over economic and interest policies that fuel global market volatilities.

And while it is expected that the current trade disputes, especially that between the US and China, will adversely impact the overall performance of HPH Trust, the trustee-manager says the “severity and timing of the impact on HPH Trust’s business in the near term cannot be readily quantified except as these events unfold.”

In a separate announcement, the trustee-manager of HPH Trust has rejected a right of first refusal offer from sponsor HPH to acquire the latter’s entire 70% stake in Shantou International Container Terminals Limited (SICT).

SICT is an equity joint-venture with 70% of its interest held by Hutchison Ports Shantou Limited (HPSL), an indirect wholly own subsidiary of HPH. It operates a feeder port in Shantou and provides container handling services in northern-east part of Guangdong Province, China.

The trustee-manager says it has considered the offer and found that the investment opportunity does not meet the investment criteria of HPH Trust.

Unfavourable factors include keen competition in that area particularly the development of Guangao port zone, the lack of potential synergy between such investment opportunity and the existing portfolio of HPH Trust and the potential adverse impact on the financials of HPH Trust if it were to acquire SICT.

Accordingly, the trustee-manager is “of the view that it would not be in the best interests of HPH Trust and its unitholders to accept the offer and acquire from HPH its interest in SICT.”

Year to date, units of HPH Trust are down 41.5% to 24 US cents.