CITIC Limited Half-Year Report 2019

machinery and related businesses as well as the continuing contribution from its specialty robotics business. Profit at CITIC Dicastal decreased by 16%, mainly due to the slowdown in major automotive markets worldwide, especially in mainland China, and the impact of tariffs levied by the United States. The resources and energy business recorded a 64% increase in profit to HK$2.1 billion, as our Australian magnetite iron ore mine, Sino Iron, recorded its first profit. This was made possible by a strong iron ore price and ongoing efforts to reduce operating costs. Nevertheless, threats to long-term viability remain, including the need to secure critical life- of-mine approvals as well as related tenure. CITIC Resources, on the other hand, recorded a 32% lower profit as a result of reduced oil, aluminium and coal prices. CITIC Metal’s profit was 24% less than the same period last year, mainly due to the underperformance of the Peruvian copper mine in which it has a 15% interest. In the engineering and contracting business, profit was HK$703 million, the same as the first half of last year. This was driven mainly by contributions from municipal and national network security projects in Wuhan, the Algerian East-West Expressway, and investment gains. New projects were signed during the period for the first time in Cambodia, including 12 rice processing and storage facilities in 10 provinces and cities. In China’s domestic market, a number of sewage treatment projects were secured that leverage our expertise in this area. Our property business recorded a profit of HK$3.5 billion, which was 25% lower than the same period last year. This profit was mainly derived from our 10% holding in China Overseas Land and Investment, contribution from our large integrated development in the Lu Jiazui financial district of Shanghai and the delivery of units at Kadooria, a luxury residential development in Hong Kong. Our other businesses continued to make contributions towards our profit and cash flow. Building Resilience The growth of our bottom line reflects the overall strength of our business as a diversified platform. But like any company operating on a global scale today, we are also exposed to various headwinds: a slowing Chinese economy, ongoing China-US trade tensions and persisting geopolitical uncertainties. Against this backdrop, it has become more important than ever to focus on building and sustaining our fundamentals and strategically positioning our businesses to be competitive over the long term. There are many examples of how we are applying this principle in our operations, but two stand out in particular: CITIC Dicastal and CITIC Pacific Special Steel. In an effort to expand its global reach, CITIC Dicastal decided in 2015 to build a manufacturing plant in Michigan in the United States in order to geographically diversify its network of production facilities. The plant has since become a critical addition to the business’s international assembly capacity. This year, the first phase of Dicastal’s plant in Morocco became operational, further strengthening the company’s ability to serve customers around the world. These plants are also helping to mitigate the impact of the China-US trade dispute on the business. Investments such as these, together with the company’s diligent cost controls and commitment to intelligent manufacturing, are bolstering its long-term competitiveness in an increasingly complex and challenging global market. Similarly, the acquisitions of Qingdao Special Steel and Jingjiang Special Steel have broadened our geographical and product coverage in the industry, enabling the business not only to 5 Half-Year Report 2019 CITIC Limited