Citic Pacific 2013 Profit Rises 9% Even as Iron Ore Loss Doubled

Feb 19, 2014 11:26 pm ET

Feb. 20 (Bloomberg) -- Citic Pacific Ltd., builder of the world’s biggest magnetite mine, said full-year profit gained 9 percent even as losses at its iron ore unit doubled.

Net income was HK$7.6 billion ($980 million), compared with HK$6.95 billion a year earlier, the Hong Kong-based company said today in a statement. That beat the HK$5.8 billion average estimate of three analysts compiled by Bloomberg. Sales decreased 6 percent to HK$88 billion.

Citic Pacific is focusing on increasing production at its Sino Iron project in Western Australia, the single largest foreign resources investment by a Chinese company. The $8 billion magnetite iron ore mine made its first shipment in December after delays and cost overruns.

“Sino Iron’s first shipment is by no means the end of the road,” Chairman Chang Zhenming said in the statement today. “In meeting the major milestone of first export shipment our company’s financial results will suffer in the short-term.”

The stock advanced 1.7 percent to HK$10.78 at the midday trading break in Hong Kong, compared with the 1.1 percent decrease in the benchmark Hang Seng index.

The loss at its iron ore unit widened to HK$1.6 billion from a loss of HK$781 million a year earlier, Citic Pacific said today. Sino Iron is currently operating the first of six production lines. When completed, the project will be able to produce 24 million metric tons of iron ore concentrate annually.

Citic Pacific, backed by Chinese state-supported conglomerate Citic Group Corp., also has property and steel units, as well as interests in Hong Kong infrastructure, energy, and motor vehicles. The company last year agreed to sell an office building in Hong Kong for HK$3.9 billion and sold its stake in a telecommunications company to its parent in 2012, in line with its strategy to focus on its main businesses.

--Editors: Iain Wilson, Rebecca Keenan