Stunned by record loss, Swire Pacific pins recovery hopes on property and Coca-Cola units in mainland China market

Group posts a HK$5.48 billion (US$707 million) loss in the first half, compared with a HK$15.85 billion profit a year earlier

The effect on 45 per cent-owned Cathay Pacific Airways is particularly severe, company says in exchange filing

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Published: 4:00pm, 13 Aug 2020Updated: 10:32pm, 13 Aug 2020

Swire Pacific, stunned by a record loss in the first half, is gravitating deeper into the mainland Chinese market for recovery as the conglomerate banks on its experience and “strong relationships” to overcome the biggest financial challenge in its history.

The British-controlled group offers some bright spots in its sprawling entity, with its Swire Coca-Cola unit recording an increase in recurring profits in the first half as consumption rebounded in the second quarter in the world’s second-largest economy. Footfall and retail sales have also started to recover, lifting its property ventures, it added.

“We believe the long-term success of Swire Pacific will reflect the continued growth of the Chinese mainland and Hong Kong, and we are well placed to take advantage of new opportunities that might arise,” chairman Merlin Swire said in its interim earnings statement on Thursday.

The comments came as Swire Pacific reported a record HK$5.48 billion (US$707 million) loss for the six months ended June 30, primarily weighed down by unprecedented slump at its 45 per cent-owned Cathay Pacific Airways. It had a profit of HK$15.85 billion a year earlier. The group never had an underlying loss since its listing in 1974, a company official said.

China’s economy grew 3.2 per cent in the second quarter, following a historic slump in the first three months of the year, as measures to ease pandemic lockdowns helped revive consumption. China’s economic recovery makes it a fertile ground for Hong Kong developers seeking relief from the city’s worst recession on record.

“Our businesses here are heavily exposed to mainland China, particularly in property and beverage business,” said Swire, the sixth generation of the family that traces its root in mainland China to more than 150 years ago. “We have been encouraged by what we have seen in the last two to three months,” he said during a post-results briefing on Thursday.