The Hong Kong Aircraft Engineering Company (HAECO) Group increased its operating profit by 44.3% to HK$466 million ($59.6 million) in the first six months of 2017.
In a filing of its interim results on the Hong Kong Stock Exchange, the MRO company adds that revenue grew by 4.3% to HK$7.4 billion.
Attributable net profit came in at HK$348 million, down from the HK$1.11 billion a year earlier. In the first half of 2016, the company's results included a one-time gain of HK$805 million from Hong Kong Aero Engine Services (HAESL) sale of its stake in Singapore Aero Engine Services (SAESL).
Total capital expenditure during the first half of 2017 was HK$355 million.
At the unit level, HAECO's main Hong Kong operations recorded a 69.5% rise in attributable profit to HK$139 million, as well as a 7.3% increase in revenue to HK$2.04 billion. HAECO Americas' nearly quadrupled its losses to HK$208 million, as revenue fell 9.5% to HK$1.43 billion. HAECO Xiamen more than doubled its attributable profit to HK$104 million, as revenue grew 26.3% to HK$1.05 billion. Finally, Taikoo Engine Services in Xiamen (TEXL) recorded a 8.7% increase in attributable net profit to HK$112 million as revenue inched up 1.6% to HK$2.56 billion.
HAECO says its main Hong Kong operations recorded more airframe and line services work in the first half of 2017, reflecting more demand and the deferral of some customers' work from the year before. Line services, meanwhile, benefited from more aircraft movements.
The company forecasts that the workload for HAECO Hong Kong and HAECO Xiamen’s airframe maintenance services to be less in the second half due to "normal seasonal reasons" and because of the deferral of work by some customers. Demand for its line services is expected to be "stable". More component repair work is expected for HAECO Hong Kong in 2H 2017.
The MRO attributed HAECO Americas' decline in results to lower demand for its airframe services, lower margins on seats sold and the completion of fewer interior reconfigurations. The results were also "adversely affected" by the non-recognition of deferred tax assets in respect of the first half of 2017 tax losses and lower than expected contributions from certain programmes There was also the loss of significant work from an unnamed major customer from August.
Demand for HAECO Americas’ airframe services is expected to decrease in the second half of 2017. Airframe services results will also be adversely affected by the additional costs of training and recruiting staff in preparation for the opening of a fifth hangar at Greensboro in 2018. The growth in demand for seats in the second half of 2017 is expected to continue but margins are expected to be lower. Forward bookings for cabin integration work are weak, says the company.
In the first half of 2017, TEXL did 26 engine performance restorations and 14 engine quick turn repairs (compared with 23 and 25 respectively in the first half of 2016). Engines from three new airlines were inducted in the first half of 2017. As such, HAECO expects demand for TEXL’s overhaul services to be stable in the second half of 2017.
HAESL overhauled 71 engines for 1H2017 as compared to 60 in the same period last year. However, the company expects HAESL’s results in the second half of the year to be "adversely affected" by higher depreciation and training costs associated with developing the capability to overhaul Trent XWB engines, which power the Airbus A350. This work is expected to start later in 2017, adds the MRO company.
Source: Cirium Dashboard