Swire Pacific posted a 90.5 per cent increase in underlying profit to HK$16.14 billion last year, driven by record earnings at Cathay Pacific Airways and gains from asset sales.
With the strong earnings, the conglomerate, which is engaged in the property, aviation and beverage businesses, raised the final dividend by 13.63 per cent to HK$2.50, bringing the full-year payout to HK$3.50, up from HK$2.80 in 2009.
Underlying earnings, which included HK$5.07 billion profit contribution from its 42.97 per cent-held Cathay, grew 278.35 per cent from HK$1.34 billion in 2009. Cathay announced a record HK$14 billion profit on Wednesday, making it probably the world's most profitable airline.
Underlying profit in Swire's property contribution rose 23 per cent to HK$4.86 billion while gross rental income from its office portfolio grew 3 per cent for the year to December.
The profit was bolstered by one-time gains from asset sales, including HK$918 million from the sale of two investment properties in Hong Kong, HK$825 million from sale of a stake in Hong Kong Air Cargo Terminals, and a HK$771 million gain from the sale of a stake in Crown Beverage Cans.
Net profit, including revaluation gains on investment properties, rose 74.7 per cent to HK$38.25 billion on turnover of HK$29.2 billion, up 17.2 per cent from 2009.
Chairman Christopher Pratt (pictured) said the group had no immediate plan to revise the proposed spin-off of its property arm, Swire Properties. 'But it is on the agenda and we will review it from time to time,' he said.
Last May, Swire called off a HK$20.84 billion initial public offering for Swire Properties because of a downturn in market sentiment.
Despite the bumper earnings, Swire shares closed 2.08 per cent lower at HK$112.90.
'Property stocks fell on concerns that US interest rates may possibly rise faster than expected. Swire cannot escape - just like the rest of the property sector,' said Eric Yuen, head of research at brokerage house GuocoCapital.
Swire Pacific, landlord of Pacific Place in Admiralty and Taikoo Place and Cityplaza in Quarry Bay, holds an investment portfolio of 14.91 million sq ft in Hong Kong, and 1.55 million sqft of retail and hotel space on the mainland.
Swire Pacific executive director Martin Cubbon said he expected the commercial market to stay strong, citing strong rental growth over the past three months.
'We do not see a property bubble in the market as current rentals are not at a level which significantly impacts on corporate profitability in Hong Kong,' he said.
Office rents at One and Two Pacific Place are HK$120 per sqft, and HK$30 to HK$40 per sqft in Island East offices in Quarry Bay.
Swire Properties last year acquired a 50 per cent interest in a 762,251 sqft site in Chengdu. It will be developed into a 2.2 million sqft retail-led development with an office tower in partnership with Sino-Ocean Land.
'We are open to opportunities to develop large-scale mixed-use developments in downtown areas. However, we think it is difficult at the moment to find projects that make financial sense in the mainland, considering the land price,' Cubbon said.