Swire sees core profit rise 30.1pc to HK$8.7b
Rental, aviation and marine units provide boost
Swire Pacific posted a 30.1 per cent jump in its core profit for last year, thanks to strong growth in rental income and exceptional performances in its aviation and marine services.
The blue-chip conglomerate, with operations from property to aviation and beverages, said core earnings climbed to HK$8.74 billion from HK$6.72 billion and turnover surged 12.77 per cent to HK$21.55 billion from HK$19.11 billion a year earlier.
Taking into account a HK$16.03 billion revaluation gain on investment properties, a HK$1.08 billion exceptional profit from the sale of a 17.2 per cent stake in Shekou Container Terminals and income from other asset sales, net profit rose 16.35 per cent to HK$26.26 billion, beating market forecasts by a wide margin.
Analysts at six brokerages surveyed by Reuters had forecast that Swire's bottom line would drop 27.69 per cent to HK$16.32 billion.
During the period, net income from marine services tripled to HK$2.55 billion. This was largely because profit from its shipping business doubled to HK$1.41 billion, also due to the one-off gain from selling Shekou Container Terminal.
'Swire Pacific Offshore is ideally placed to benefit from continued robust demand for its services from the offshore oil and gas sector,' said chairman Christopher Pratt.
He added that the group had ordered 24 new vessels, of which eight will be delivered this year.
Meanwhile, the strong performance in its 40 per cent owned Cathay Pacific Airways contributed net profit of HK$2.68 billion, 57.64 per cent more than the previous year.
Benefiting from a rising economy, property investment income grew 16.22 per cent to HK$5.66 billion, with profit rising 22.41 per cent to HK$2.95 billion.
Projects in its portfolio were fully occupied with rents ranging between HK$30 and HK$90 per square foot, said Keith Kerr, the chairman of Swire Properties. He added that One Island East was 86 per cent leased at an average rent of HK$40 per square foot.
Mr Kerr said the group was still interested in spinning off some of its assets to establish a real estate investment trust, but he would not comment further on the plan.
Credit Suisse analyst Cusson Leung is positive about Swire's overall strategy in the long term but believes its growth momentum will slow because the aviation unit's performance may have peaked.
'Concern about softening demand for offices in Central may cool the spill-over effect on Island East in the next few years, which will affect rents for its Island East portfolio,' Mr Leung said.
Swire had a HK$14.74 billion capital expenditure last year, a 230 per cent jump from 2006. '[The capital investment for this year] will be somewhat lower than in 2007, as it was a big year for property development,' group finance director Martin Cubbon said.
Swire declared a final dividend of HK$3.23 for each A share and 64.6 HK cents per B share. Its A shares dropped 0.22 per cent to close at HK$90.30 while its B shares finished 1.48 per cent higher at HK$17.86.