MRO group Hong Kong Aircraft Engineering Co (HAECO) has reported a 3.8% increase in its 2012 net profit to Hong Kong dollars (HK$) 909 million ($117 million), compared with HK$876 million a year earlier.
Operating profit for the full year fell by 7.1% to HK$494 million from HK$532 million in 2011, while turnover increased by 13% year on year to HK$5.83 billion.
HAECO chairman Christopher Pratt says: "Demand for HAECO's airframe maintenance and line maintenance remained strong in Hong Kong in 2012, although there were fewer cargo flights for which to undertake line maintenance. In 2012, 1.3% fewer manhours were sold for airframe maintenance and 4.6% more aircraft movements were handled, compared with 2011. HAECO was not able to meet the demand for airframe maintenance in the second half of 2012 because of a shortage of skilled and semi-skilled labour."
"Results from Taikoo Xiamen Aircraft Engineering Co [TAECO] were adversely affected by exchange rate and deferred tax movements. Hong Kong Aero Engine Services [HAESL] and Singapore Aero Engine Services did well in 2012, with stronger than expected demand for engine overhaul services."
HAECO also revealed that there was a fire at its subsidiary, Taikoo (Xiamen) Landing Gear Services, in November 2012. This resulted in losses of HK$4 million. No work has been done at the premise since then, and operations are only expected to recover nine months later.
Going forward, HAECO expects to do less airframe maintenance work in Hong Kong in 2013 because of labour shortages, although the demand for line maintenance is expected to remain stable.
"HAESL's performance in 2013 is expected to be adversely affected by the early retirement of some of Cathay Pacific's Boeing 747-400 aircraft and by a reduction in the required frequency of scheduled maintenance on [Rolls-Royce] Trent 700 engines, which power the Airbus A330 aircraft," adds Pratt.
Operating expenses for the year ended 31 December 2012 amounted to HK$5.33 billion, an increase of 14% compared with the same period a year earlier.
Total capital expenditure for 2012 was HK$364 million, with further HK$482 million commitment for year-end.