CITIC Limited Half-Year Report 2019

11 Half-Year Report 2019 CITIC Limited Manufacturing: The manufacturing business recorded a net profit attributable to ordinary shareholders of HK$3,514 million in the first half of 2019, representing a year-on-year increase of HK$1,108 million, or 46%. By continuing to develop production capacity, the special steel business achieved an 18% year-on-year increase in sales and production volume. An increase in scale, together with cost reduction and efficiency enhancement measures such as the optimisation of ore blending, effectively offset the adverse impact of rising iron ore prices, which led to an increase in net profit of 61% year-on-year. Affected by the global downturn in automobile sales and the imposition of tariffs by the United States, sales volumes of CITIC Dicastal’s aluminium wheels and castings decreased by 6.7% and 0.8%, respectively, leading to a drop in net profit of 16% year-on-year. The first phase of the manufacturing base in Morocco, with an annual production capacity of three million units, officially went into operation at the end of June. The profit of CITIC Heavy Industries increased by 50% year-on-year due to the recovery of the heavy equipment market and growth in new orders. Engineering contracting: In the first half of 2019, the engineering contracting segment recorded a net profit attributable to ordinary shareholders of HK$703 million, which was basically the same as the corresponding period last year. Project income from CITIC Construction in mainland China increased substantially, while net profit year-on-year fell 3.9% due to a tax gain in the corresponding period last year. The income of CITIC Engineering from EPC projects and survey and design services increased 131% and 31% year-on-year, respectively, with a rise in net profit of 34% year-on-year. Real Estate: The real estate business recorded net profit attributable to ordinary shareholders of HK$3,540 million in the first half of 2019, representing a year-on-year decrease of HK$1,207 million, or 25%, mainly due to the decrease in delivery of residential units in the Kadooria project in Hong Kong and delayed settlement of CITIC Coast New Town project in Shantou. The occupancy rate for investment properties was approximately 93% as at 30 June 2019. Others: Net profit attributable to ordinary shareholders in the first half of 2019 decreased by HK$1,405 million, or 56%, to HK$1,093 million as compared with the corresponding period last year. This was mainly due to the gain of approximately HK$1,300 million arising from the disposal of the toll roads business in the corresponding period last year. CITIC Press achieved fast growth in its publication business, with an increase in net profit of 13% year-on-year. It was successfully listed on ChiNext Board in early July. The net profit of the environmental protection business dropped 84% year-on-year due to the decrease in EPC project settlements. Dah Chong Hong’s net profit fell 32% year-on-year due to the downturn in automobile market. The McDonald’s restaurant business continued to expand the number of its stores in mainland China, with net profit declining due to the implementation of new lease standards. Group Financial Results Revenue In the first half of 2019, CITIC Limited achieved revenue of HK$277,176 million, representing an increase of HK$18,853 million, or 7.3%, as compared with the same period last year. The financial services business recorded revenue of HK$111,903 million, up by 8.6%. Excluding the effect of currency translation, the increase would have been 15%, mainly due to rapid growth in the scale of deposits and loans as well as a year-on-year increase in the net interest margin of CITIC Bank, leading to a rise in net interest income and non-interest income of 15% and 14%, respectively.