Accounting change brings Swire windfall
Updated at 7.01pm:
Hong Kong conglomerate Swire Pacific on Thursday reported a large increase in net profit on the back of property valuation under new accounting rules and strong performance in the company's marine services, trading and industrial businesses.
Swire's net profit for the six months to June rose 144 per cent to $7.3 billion - up from $3 billion in the first half of last year.
Swire chairman David Turnbull said the results reflected the adoption of new Hong Kong Financial Reporting Standards from January 1 this year.
The company's turnover also rose to $8.9 billion in the first six months of the year from $8.4 billion. Operating profit was $7.6 billion for the interim period, from $2.6 billion. Swire said that valuation of its investment properties at the end of June pushed up operating profit by $4.58 billion. Excluding the property adjustment, earnings would have been $3.26 billion, or 11 per cent up year on year.
The company announced an interim dividend of 60 cents for 'A' shares and 12 cents for 'B' shares.
Mr Turnbull said the strong rise in Taikoo Motors, Swire Resources, Swire Pacific Offshore and Beverage operations on the mainland have contributed to the profit growth in the beverages, marine services and trading and industrial divisions.
However, falling residential property sales and rising oil prices had trimmed profits in the property and aviation divisions.
Mr Turnbull said profits of the property and other divisions were expected to be strong in the second half.
Earnings from aviation unit Cathay Pacific Airways would still be affected by rising oil prices.
'The second half will also see a pick-up in profits from strong sales of residential apartments in Miami,' Mr Turnbull said. 'Prospects for the aviation division are more mixed with the likelihood of continued high fuel prices restricting profit growth.'
Swire Pacific business divisions are: property, aviation, beverages, marine services and trading and industrial divisions. Its operations are mainly based in the greater China region.
Swire's shares closed 60c or 0.79 per cent higher at $76.60 on the stock Exchange on Thursday afternoon.