Swire profit surges 240pc on Cathay hedging gains
Swire Pacific reported a 240 per cent rise in net profit to HK$19.92 billion for the year to December 2009, thanks to higher contributions from its aviation, property and beverage businesses.
The strong result prompted the British hong to raise its final dividend 49 per cent to HK$2.20 per share, bringing the full-year payout to HK$2.80, up from HK$2.38 in 2008. Excluding property revaluation gains and the associated deferred tax, underlying profit rose 68 per cent to HK$8.47 billion with earnings per share of HK$13.24, against HK$3.87 in 2008.
The increase in underlying profit reflects improved results in aviation unit Cathay Pacific Airways.
Despite sharply reduced revenues for the year, Cathay reported a profit of HK$4.69 billion, benefiting from mark-to-market gains in its fuel hedging contracts, according to chairman Christopher Pratt. Cathay contributed HK$1.35 billion to Swire Pacific last year.
Underlying profit in Swire's property division rose 8 per cent to HK$3.97 billion while gross rental income grew 9 per cent.
Demand in the Hong Kong office market recovered in the second half as the economy improved. 'We are pleased to see a good rebound to the rental level of 15 months ago. Average rents at Pacific Place are in the low HK$80s [per square foot] and around HK$30 in Taikoo Place, Quarry Bay,' Swire Properties chief executive Martin Cubbon said.
However, the company's hotel interests suffered from difficult market conditions and lower profits were recorded from the trading portfolio.
The beverages division reported a 29 per cent increase in attributable profit over 2008. Overall sales volume grew 13 per cent, thanks to the strong growth on the mainland.
Pratt declined to comment on the group's proposed spin-off of its property division, but said Swire Pacific would remain as a healthy and exciting company even if the property division had a separate listing.
It has been reported that at least three investment banks - Goldman Sachs, HSBC Holdings and Morgan Stanley - have been appointed to handle the US$3 billion listing.
Meanwhile, Pratt said a subsidiary, Swire Aviation, intended to sell its 30 per cent stake in Hong Kong Air Cargo Terminals, which accounts for 80 per cent of total cargo tonnage at the airport. Swire Pacific is building a new air-cargo terminal, which will be completed in the middle of 2013.
