(Extracted From Annual Report 2024)

HPH Trust recorded good financial results in 2024, as global trade gradually recovered primarily due to strong consumer spending in the United States and Europe. Although ship attacks in the Red Sea disrupted global trade and caused erratic shipping schedules, persistently high interest rates and geopolitical tensions also continued to complicate the operating and financial environment, HPH Trust's adaptability and robust financial management strategy enabled the Trust to navigate through these storms.

Strong Consumer Spending Drives Throughput Growth

During the year under review, throughput for HPH Trust ports was 22.3 million twenty-foot equivalent units ("TEU"), an increase of 5% compared to 2023. YANTIAN's performance was particularly strong, with throughput growing 12% compared to 2023. Outbound cargoes to the United States and the European markets rose by 14% and 12%, respectively. This was supported by strong consumer spending in these two major markets throughout 2024.

In contrast, Hong Kong's cargo volumes did not substantially recover throughout 2024. Facing changes in shippers' preferences and competitive pricing at ports in the Greater Bay Area ("GBA"), the combined throughput of Kwai Tsing Terminals decreased by 6% compared to the same period in 2023. In response, HPH Trust continued to actively lobby both Hong Kong and Central government and policymakers, advocating for sector-specific support and increased collaboration in the GBA. During the year, HPH Trust introduced Shenzhen-Hong Kong Connect, the largest port cluster in South China, integrating Kwai Tsing Terminals and YANTIAN, providing a seamless one-stop logistics solution for our customers in the long term.

Average revenue per TEU at YANTIAN and Kwai Tsing Terminals were comparable to 2023. Over the year, revenue and other income totalled HK$11,567.3 million, a 9% increase from HK$10,635.5 million in 2023.

Profit Growth With Better Operating Results

The cost of services rendered in 2024 was HK$3,600.7 million, compared to HK$3,624.8 million in 2023, due to savings in direct staff costs. Staff costs amounted to HK$260.6 million, 1% higher than HK$258.4 million in 2023 due to salary increment but partly offset by RMB depreciation. Depreciation and amortisation totalled HK$2,824.4 million in 2024, which was 2% lower than HK$2,894.8 million in 2023.

Other operating income in 2024 was HK$60.5 million, a drop of 10% compared to HK$67.4 million in 2023. Other operating expenses totalled HK$564.0 million, compared to HK$604.8 million in 2023, mainly due to loss on disposal of fixed assets in 2023 and lower rent and rates.

Total operating profit reached HK$4,378.1 million, a rise of HK$1,058.0 million or 32% compared to HK$3,320.1 million in 2023. Profit for the year was HK$2,173.2 million, a jump of HK$691.7 million or 47% compared to HK$1,481.5 million in 2023. Profit attributable to HPH Trust unitholders was HK$650.0 million, representing an increase of HK$416.5 million or 178% compared to HK$233.5 million in 2023.

Prudent Financial Strategies

HPH Trust maintained a robust financial position throughout 2024, ending the year with a cash balance of HK$8.1 billion, compared to HK$8.2 billion at the end of 2023.

Debt management remained a key focus, with 50% of the Trust's debt maintained at fixed interest rates as at 31 December 2024. To further deleverage its balance sheet, HPH Trust continued its debt repayment programme. Total consolidated debt dropped to HK$25.2 billion from HK$25.7 billion at end of 2023. The Trust obtained new loans of HK$3.9 billion, reduced external borrowings by HK$0.5 billion, and redeemed guaranteed notes of HK$3.9 billion during the year. Net attributable debt of HPH Trust was HK$19.1 billion by year-end, a 3% decrease from 2023.

HPH Trust recommended a total payout of HK$1,062.8 million for 2024, resulting in a distribution per unit of 12.2 HK cents. Based on the US$0.164 market price as at 31 December 2024, the distribution yield stands at 10%.

Outlook

Even as HPH Trust celebrates a fruitful 2024, the global trade landscape continues to evolve, presenting both challenges and opportunities for 2025. Policy shifts in the United States' trade policies and the restructuring of shipping alliances may introduce new complexities to global trade dynamics. From a financial perspective, even though the interest rate is easing, HPH Trust will likely face higher costs to refinance its HK$3.9 billion debt due in March 2025. The refinancing interest rate is expected to be significantly higher than the relatively low interest rate HPH Trust faces from loans drawn four to five years ago.

The Trust remains focused on operational excellence underpinned by prudent capital management and enhanced technological capabilities. With its robust financial foundation and proven adaptability, HPH Trust is well positioned to navigate future challenges while capitalising on emerging opportunities in the global maritime sector.