HAECO net profit down 21% to HK$359m in H1

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MRO group Hong Kong Aircraft Engineering Co (HAECO) has reported an attributable profit of Hong Kong dollars (HK$) 359 million ($46.3 million) for the first six months of 2013.

This was down by 21% from HK$455 million in the same period last year.

The company's turnover increased by 11% to HK$3.22 billion, while net operating profit fell by 45% to HK$155 million. Total capital expenditure during the first half was HK$285 million.

HAECO's chairman Christopher Pratt says: "Overall demand for HAECO's line maintenance services in Hong Kong in the first half of 2013 increased in line with aircraft movements. Airframe maintenance and component overhaul services were adversely affected by shortages of skilled and semi-skilled labour, which resulted in a significant reduction in capacity during the first half of the year."

Taikoo (Xiamen) Aircraft Engineering Co (TAECO) recorded improved financial results, which reflected the higher demand for its airframe maintenance services, while Hong Kong Aero Engine Services Ltd (HAESL) recorded a 2% decrease in profit during the period.

HAESL's results were adversely affected by the fall in demand for engine overhaul services that resulted from the early retirement of Cathay Pacific's Boeing 747-400 aircraft. However, the effect of this was mostly offset by the stronger-than-expected demand for the overhaul of Rolls-Royce Trent 700 engines.

Taikoo Engine Services Xiamen Co performed more engine overhauls and as a result, the company reduced its losses during the six-month period.

The operations of Taikoo (Xiamen) Landing Gear Services Co (TALSCO) continued to be affected by the fire that occurred in November 2012 and no landing gear overhaul work was done during this period. Preparatory work for the reconstruction of TALSCO's premises is being done, with a view for partial resumption of operations in the early part of 2014.

"The outlook is challenging," says Pratt. "Output is expected to increase at the mainland China joint ventures, but they are likely to continue to be affected by under utilisation of facilities. The group will continue to take measures to improve productivity in order to mitigate the effect of cost increases."