Standard & Poor’s monitors Hutchison Whampoa
New York-based investment rating service Standard & Poor’s said today that Hutchison Whampoa Ltd., parent company of Hutchison Port Holdings, faces a “pivotal” year as the giant Hong Kong-based conglomerate attempts to rectify weak performances from its non-port related units.
Standard & Poor’s lists Hutchison Whampoa with an 'A-' corporate credit rating. “The outlook on the rating is negative while Hutchison faces uncertainties over several key issues in 2006, including positive consolidated cash flow generation, the performance of the company’s third-generation telecommunications segment, and management’s commitment to reduce debt,” said Mary Ellen Olson, Standard & Poor’s credit analyst.
Hutchison Port Holdings posted HK$10.2 billion ($1.3 billion) in earnings before interest and tax (EBIT) in 2005, up 14 from 2004 and totaling 17 percent of Hutchison Whampoa’s consolidated HK$59.5 billion ($7.7 billion) EBIT.
“The negative outlook on Hutchison was not changed following the company’s recently announced fiscal 2005 results, which saw net debt rise as a result of heavy capital expenditure and new investment during the year. Funds from operations and free cash flow generation, including all customer acquisition costs associated with its 3G division, are expected to remain weak for the year,” Standard & Poor’s said.
“Hutchison’s financial performance remains weak. Standard & Poor’s is looking for improved net debt levels and cash flow generation to stabilize the rating at the 'A-' level. Outside of a credit event, such as a large-scale merger or asset sales, upside rating potential is limited over the short term.”
Standard & Poor’s monitors Hutchison Whampoa
