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SCMP Reporter

Swire Pacific has met market expectations by announcing a doubling of attributable profit to $4.43 billion for the year to December 31, after avoiding exceptional losses which dragged down its 1998 results.

 But stripping out the $2.07 billion write-down of the value of its East Kowloon property in 1998, attributable profit climbed a meagre 2 per cent.

 The airline-to-property conglomerate's sales remained roughly flat at $16.86 billion, also in line with market expectations.

 The improvement in earnings was largely due to subsidiary Cathay Pacific Airways' sharp turnaround in the second half, which contributed a larger than expected $985.5 million to Swire's result.

 Earnings per A share were $2.86, up from $1.13, while earnings per B share were 57.2 cents, up from 22.7 cents.

 The final dividend was 76 cents per A share, taking the annual payout to $1.10 - up 31 per cent on 1998. The final dividend per B share is 15.2 cents, taking the annual payout to 22 cents, up from 16.8 cents.

 Swire made a $3 billion net profit on its property businesses last year, up from $1.5 billion after the write-down.

 Chairman James Hughes-Hallett said properties in Island East were increasingly being leased and interest in Pacific Place had also rekindled, signalling that rental levels could recover this year.

 Swire recently let 100,000 square feet of office space to ABN Amro and 200,000 sq ft to telecommunications companies in Island East.

 Demand for its Ocean Shores development has been strong, with nearly 1,600 units sold. The company expects the remaining units to be sold in the coming months.

 But at the prices sold, Swire would still make a loss on the project.

 Mr Hughes-Hallett said the conglomerate would continue to restructure its businesses this year and signalled that it might continue divesting non-core operations.

 'We've taken some tough medicine in the last year,' Mr Hughes-Hallett said.

 'We've restructured our businesses in Hong Kong . . . and our cost structure is now highly competitive.'  Sluggish demand for soft drinks worldwide caused net profits from its beverage business to fall 25.5 per cent to $187 million.

 But its bottling operations broke even for the first time, Mr Hughes-Hallett said.

 Profit in marine services also slipped by 24.6 per cent to $472 million.

 Swire's industrial operations returned to the black, with a net profit of $81 million, up from a loss of $97 million in 1998.

 Attributable profit from trading operations amounted to $114 million, mostly from the sale of three businesses.

 Director Keith Kerr brushed aside concerns that Swire was lagging in e-commerce initiatives.

 'We don't make announcements to please the market or please the press,' Mr Kerr said.

 He said the company would focus on connectivity of buildings and broadband infrastructure first, before moving on to other initiatives.

 Swire would announce a new technology initiative to do with its properties on Wednesday.



Swire doubles profit to $4.4b on back of Cathay Pacific turnaround