Swire Pacific reports lower 2022 profits as Covid-19 curbs hit units Cathay Pacific, Swire Properties, Swire Coca-Cola
- Underlying profit dropped 10 per cent as Covid-19 curbs led to losses at Cathay Pacific, while profits fell at Swire Properties and Swire Coca-Cola
- The company is optimistic about growth now that Hong Kong and mainland China have removed all pandemic restrictions, Swire Pacific chairman says
Swire Pacific’s profits fell 10 per cent in 2022 as losses widened at Cathay Pacific and other business units while profits fell at Swire Properties, reflecting Hong Kong’s difficult business environment under the city’s worst wave of Covid-19 infections and harshest pandemic restrictions.
The Hong Kong-based conglomerate’s underlying profit fell to HK$4.748 billion (US$604.8 million) in 2022 from HK$5.293 billion in 2021, while recurring underlying profit fell by 22 per cent to HK$3.8 billion, according to a filing with the Hong Kong stock exchange on Thursday.
Units besides Cathay Pacific that contributed to lower profits included Swire Coca-Cola, where margins fell due to pandemic measures and surging costs, and aircraft maintenance and engineering firm Haeco, Cathay Pacific’s sister company.
Real estate arm Swire Properties posted a 9 per cent year-on-year decrease in underlying profit to HK$8.7 billion, with recurring underlying profit falling less than half a per cent to HK$7.176 billion.
“The economic environment remained challenging, with Covid-19 related measures continuing to affect our operating results,” said Guy Bradley, Swire Pacific’s chairman. “The measures made for a difficult first quarter in Hong Kong, especially for Cathay Pacific, and had a significant impact on all our businesses in the Chinese mainland in the second and third quarters.”
“All this should have a significant positive impact on our businesses, in particular on our aviation businesses,” he said. “Achieving our strategic objective of growing our core businesses remains our prime focus.”
“The increased losses at Cathay Pacific reflected the results of associates,” Bradley said. “Disregarding associates, the results of Cathay Pacific improved.” HK Express, a subsidiary of Cathay Pacific, has reported a loss of HK$1.35 billion.
Swire Pacific declared dividends of HK$1.85 per “A” share and HK$0.37 per “B” share. The conglomerate’s shares closed down 3 per cent at HK$63.40 on Thursday.
Swire Properties is one of Hong Kong’s largest commercial landlords. Its portfolio includes mixed-use projects such as Pacific Place and Taikoo Place, as well as office buildings including One Pacific Place, Two Pacific Place, Three Pacific Place and One Taikoo Place.
Hong Kong’s supply of new office space will hit 14.5 million sq ft this year, a record high, according to property consultancy CBRE.
“We think the [office property] market will remain relatively weak in the short to medium term. But we’re very confident that prospects will continue to improve,” Tim Blackburn, Swire Properties’ CEO, said at a press briefing.
Swire Properties missed a HK$7.5 billion profit target set by Citibank, but rental revenue of HK$12.34 billion was 1 per cent higher than its estimate, the investment bank said in a note on Thursday. Citibank recommended a “buy” for Swire Properties shares.
The property company declared a dividend of HK$0.68 per share. Swire Properties shares closed down 1.6 per cent at HK$21 on Thursday.
