Swire looks to founder’s scion to steer the trading, property units
John Slosar, who will retire from the Swire Group on July 1, will remain as chairman of Cathay Pacific Airways to guide the carrier’s transformation plan
The Swire Group has named a sixth-generation descendant of its founder to chair its Asian holding unit and property subsidiary, returning a family member to the company’s apex for the first time in more than four decades.
Merlin Bingham Swire, the group’s 44-year-old chief executive, will take over as chairman of Swire Pacific and Swire Properties starting July 1, according to a press release. John Robert Slosar, Swire Pacific’s chairman since 2014, will retire from the group, although he will remain as chairman of Cathay Pacific Airways.
The reshuffle marks the first time a family member has returned to chair one of Asia’s largest conglomerates, with a HK$106 billion (US$13.6 billion) business owning stakes in almost every aspect of Hong Kong life, from the bottling of beverages and sugar refining to developing commercial and residential property, to operating the city’s dominant airlines.
It comes as the profitability of Swire Pacific, the holding company, has been struggling to recover from the lowest levels in a decade. Both Swire Pacific and Swire Properties are scheduled to announce their full year and second-half financial results on March 15.
Swire Pacific’s 2016 net income fell 28 per cent to HK$9.64 billion under general accounting rules, the lowest since 2008, while revenue rose 2 per cent to HK$62.39 billion. Things are better at the group’s real estate unit Swire Properties, which builds upscale offices and manages shopping centres including Pacific Place in Hong Kong, with 2016 net income under general accounting principles unchanged at HK$7.11 billion, the lowest since 2011. In adjusted terms, net income and revenue at the property unit had both been increasing since 2011.
Swire Pacific issued a profit warning in November, citing a difficult operating environment in the airline industry, the second time in a decade it has given investors such a warning.
The biggest challenge for Swire is the three-year-turnaround plan for Cathay Pacific, 45 per cent owned by the Swire Group. The carrier, scheduled to report its 2017 results on March 14, is expected to announce a second annual loss, its first back-to-back loss since it first took flight in 1946.
“The sudden board change obviously shows that the [founder’s] family is dissatisfied with the performance of Swire Pacific,” said Alvin Cheung Chi-wai, associate director at Prudential Brokerage in Hong Kong. “Merlin Swire will certainly adopt a growth strategy, but it will take time to see the results.”
As chairman at Cathay Pacific, Slosar was the main driver of a 2017 management reshuffle that promoted chief operating officer Rupert Hogg to replace Ivan Chu Kwok-leung as chief executive, in a restructuring to improve the carrier’s performance. Cathay Pacific’s shares have risen by 10.5 per cent since the reshuffle took effect ion May 1 last year.
Slosar will remain as the airline’s chairman. His retirement from the Swire Group after four and half years reflects a “normal tenure” compared with his predecessor Chris Pratt, said a Swire Pacific spokeswoman. Pratt chaired the board for eight years until March 2014.
Merlin Swire is the sixth-generation descendant of John Swire, who founded his trading company in Liverpool, England two centuries ago in 1816. He joined the group in Hong Kong in 1997, and worked his way through various units within the group in Hong Kong, Sydney, Shanghai, Xiamen and London. He has been executive director of Swire Pacific for the past 10 years.
“This move back to Hong Kong reflects how important Hong Kong is to the group’s business and reaffirms the Swire family’s long-term commitment to Swire Pacific at a time of rapid change and exciting growth opportunities,” the incoming chairman said in a press release.
“After 20 years in the business, I am delighted to be returning to Asia as chairman of Swire Pacific during such a dynamic time in the development of China and the region.”
(Corrects Merlin Swire’s age in the second paragraph.)