HONG KONG -- Citic Pacific Ltd. posted a 43% fall in its first-half net profit, and said it will continue to divest noncore assets while boosting investment in core businesses.
The conglomerate, which suffered massive losses from Australian dollar positions that went sour late last year, said its net profit was 2.47 billion Hong Kong dollars (US$318.7 million) in the six months ended June 30, down from HK$4.36 billion a year earlier.
The earnings decline mostly resulted from a 72% drop in contributions from the company's steel division to HK$524 million, as the financial crisis hurt demand.
Chairman Chang Zhenming said Citic Pacific's business is fundamentally strong and the company is well positioned to benefit from the recovering Chinese economy.
"We are also studying and exploring potential opportunities and synergies between Citic Pacific and Citic Group," he said. Citic Pacific is a unit of state-owned investment company Citic Group.
The company said it is evaluating several property projects in China, after a deal signed with Citic Real Estate Co., another unit of Citic Group. Under the pact, Citic Real Estate will advise Citic Pacific on potential projects in which the Hong Kong-listed company would take a stake of as much as 20%.
The company's first-half revenue fell 32% to HK$18.1 billion from HK$26.67 billion.
As part of its restructuring process, Citic Pacific will sell noncore assets it doesn't control. Assets the company doesn't consider significant or that don't make a big enough profit also will be sold, it said.
After the sale of the company's 20% stake in a power plant in Inner Mongolia in May, Citic Pacific said last week it sold its 14.5% stake in Cathay Pacific Airways Ltd. to Air China Ltd. and Swire Pacific Ltd. for HK$7.3 billion.
Mr. Chang said the company will use the proceeds from the stake sale for new projects and to reduce debt, adding that it has no plans to sell its remaining 2.98% shareholding in the airline.
He said Citic Pacific also has no plans to sell its stakes in two Hong Kong cross-harbor tunnels, as they could provide a stable cash flow.
The company said it restructured all its Australian dollar-leveraged foreign-exchange contracts into plain forward contracts from March 2009 to May 2009.
It said it has signed or has been negotiating new loans of HK$10 billion over the past few months.
