Hong Kong’s embattled rail operator has warned of a HK$400 million net loss in the first half of this year compared with a HK$5.5 billion net profit in the same period last year as it reels from the coronavirus pandemic and the city’s battered economy.
According to a statement on the stock exchange on Tuesday, the MTR Corporation said the estimated loss was caused by the severe impact of the Covid-19 crisis, the decline of its recurrent businesses, and the revaluation loss on its investment property portfolio estimated at HK$6 billion for the first half of this year.
“The group’s recurrent businesses are continuing to be significantly adversely affected as a result of the Covid-19 pandemic and the deterioration of the general economic environment,” it said.
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The rail giant revealed that for the first six months of this year, ridership had dropped to only 637 million passengers, down 37.7 per cent from a year ago. The MTR Corp had taken a severe beating with the suspension of cross-border through-train services and high-speed rail from late January, while its domestic services suffered as school closures, work-from-home arrangements and social-distancing rules left many trains operating far below capacity.
It said the damaging legacy of the anti-government protests since last June, and the unfolding coronavirus outbreak were expected to shave HK$1.3 billion off its recurrent business profit in the first two months of this year.
The firm emerged as a target of radical protesters in August after they accused the MTR Corp of bowing to pressure from Beijing and colluding with police.
Protesters trashed stations and set facilities on fire, hurling petrol bombs at entrances and spray-painting graffiti on walls. Some also threw objects onto tracks, halting train operations.
The civil unrest was sparked by the now-withdrawn extradition bill, which would have allowed for the transfer of fugitives to jurisdictions with which Hong Kong lacks such a deal. The protests morphed into a wider, months-long anti-government movement calling for universal suffrage and an investigation into police action.
The MTR Corp, already hit hard by the protests, saw profits from recurrent business plunge 44.8 per cent to HK$4.98 billion in 2019 from a year earlier. It was the sharpest decline in percentage terms since the government-controlled company went public in 2000.
Including non-recurring items and property gains, the corporation’s net profit shrank 25.5 per cent to HK$11.93 billion last year.
But the company remained optimistic. “The board is of the view that the overall financial position of the group remains sound when taking into account the rail and property businesses of the group as a whole.”