CITIC Limited Half-Year Report 2020

5 Half-Year Report 2020 CITIC Limited Conversely, non-interest income increased by 18% mainly due to higher gain on investments. CITIC- Prudential Life achieved a profit growth of 67% to RMB777 million, driven by a rise in premium income as well as higher investment income. CITIC Securities’ profit rose 38% to RMB8.9 billion. In the non-financial segment, profit contribution from the manufacturing business was HK$2.8 billion. The 20% decline from a year ago is largely attributable to CITIC Limited’s reduced shareholdings in CITIC Pacific Special Steel and CITIC Dicastal. Operationally, unanticipated supply chain disruptions negatively impacted this segment, particularly CITIC Dicastal. However, CITIC Pacific Special Steel delivered a stable performance and CITIC Heavy Industries recorded a profit increase. CITIC Pacific Special Steel was able to achieve a profit of RMB2.75 billion, on par with the same period last year, despite the rising cost of raw materials, particularly iron ore and coke, as well as reduced demand from overseas markets and lower product prices. The business increased sales by successfully cultivating new customers in the domestic market, rapidly adjusting the product mix to reduce reliance on underperforming industries and executing ground-level controls to reduce operating costs, all of which contributed to its solid performance. Profit at CITIC Dicastal declined 45% to RMB276 million in the first half of the year. Sales of aluminium wheels fell 15% to 21.48 million units, primarily due to a sharp decline in sales to international markets where the product mix is weighted towards the premium segment. The company’s profitability was also negatively affected by a loss from its casting business, mainly as a result of temporary production suspensions at the KSM facility in Germany during the COVID-19 outbreak. At CITIC Heavy Industries, profit increased by 77% to RMB169 million driven by the solid performance of the heavy machinery and its related services businesses. The company’s special robotics business also contributed to the bottom line. The resources and energy business contributed HK$706 million, a decrease of 66%. This was mainly due to a HK$431 million loss recorded at CITIC Resources resulting from the sharp decline in the price of crude oil. CITIC Metal’s operational performance was also impacted by lower commodity prices, particularly copper and ferroniobium; profit, however, increased by 18% to HK$695 million as a result of higher investment income. Our Australian magnetite iron ore mine maintained its profitability for the reporting period due to a buoyant iron ore price, consistent production and ongoing efforts to reduce operating costs. Securing timely and necessary life-of-mine approvals remains a priority and is critical to the long-term sustainability of the project. In engineering contracting, profit was HK$380 million, 46% lower year-on-year as COVID-19 affected project development. In the first half of 2020, new contracts signed by both operating companies totalled RMB15 billion, with about half in the domestic market. The largest is a CITIC Construction contract to build a fertiliser processing facility and related infrastructure, including a power station, in Belarus.