CLP Holdings posts sevenfold profit jump in 2023 amid fair value adjustments, but misses expectations as revenue drops

CLP Holdings, which runs the larger of Hong Kong’s two power utilities and has significant operations in Australia and India, reported a sevenfold profit jump in 2023 buoyed by a turnaround in the fair value related to its forward energy contracts.

But its earnings fell short of market expectations amid falling revenue.

Earnings rose 620 per cent to HK$6.66 billion (US$851.3 million), from HK$924 million in the previous year, the company said in an exchange filing on Monday.

Revenue slid 13.4 per cent to HK$87.17 billion, it added.

The company’s earnings landed below a median forecast of HK$7.31 billion by analysts in a Bloomberg survey. Revenue also failed to meet a consensus estimate of HK$93.71 billion.

“The group’s fair value movements, predominately related to EnergyAustralia’s forward energy contracts, turned around from a loss of HK$2.979 billion in 2022 to a gain of HK$2.125 billion in 2023 and brought the company operating earnings with a significant rebound to HK$12.252 billion,” CLP said in the filing.

CLP’s operating profit before fair value adjustments rose 33 per cent year on year to HK$10.13 billion in 2023.

The company also announced a fourth interim dividend payment of HK$1.21 per share, the same as the year before. Total dividends in 2023 amounted to HK$3.10, unchanged from 2022.

“Looking to the future, decarbonisation stands as the foremost priority for our business, and Climate Vision 2050, our blueprint for achieving net-zero greenhouse gas emissions by midcentury, remains one of, if not the, main cornerstone of our strategy,” CEO Chiang Tung-keung said in the filing. “Late last year, we conducted a review to make sure that this blueprint stays aligned with the latest developments in our businesses as well as the external risks and uncertainties we face.”

Chiang, formerly the head of CLP’s Hong Kong unit, was named group CEO in mid-2023, becoming the first Chinese national to hold the role.

At present, power generation accounts for around 60 per cent of Hong Kong’s carbon emissions.