Swire Pacific (19) H1 2024 earnings summary

Executive summary

• Achieved solid interim results in H1 2024 despite challenging conditions and the absence of Swire Coca-Cola USA's profit contribution following its disposal in 2023.

• Aviation Division, led by Cathay and HAECO, was the main profit driver, with robust travel and cargo demand and a HK$100 billion investment commitment over seven years.

• Property Division continued strong investment, achieving a 65% commitment rate on a HK$100 billion 10-year plan, but faced profit headwinds from higher finance charges and lower rental income.

• Beverages Division expanded with a 39% stake in ThaiNamthip (Thailand/Laos), offsetting the loss from the US disposal; profit declined in Chinese Mainland but grew in Hong Kong, Taiwan, and Southeast Asia.

• Shareholder returns enhanced through increased dividends and ongoing share buy-back programmes.

Financial highlights

• Recurring underlying profit dropped 2% to HK$4,762M; underlying profit attributable to shareholders was HK$5,576M (flat year-over-year); statutory profit fell 7% to HK$3,914M.

• Revenue declined 23% to HK$39,563M, mainly due to the SCCU disposal.

• Interim dividend per 'A' share increased by 4% to HK$1.25.

• HAECO recurring profit grew 535% year-over-year to HK$400M.

• Share buy-back program of up to HK$6B ongoing through May 2025, with HK$2,014M spent in H1 2024.

Outlook and guidance

• Management remains confident in the medium-term outlook for all core businesses and is well positioned to invest further.

• Market volatility, economic slowdown, and global uncertainty expected to persist in H2 2024.

• Property: Hong Kong office and retail markets expected to remain soft; Chinese Mainland retail demand solid.

• Beverages: Short-term challenges in Hong Kong and Chinese Mainland; growth expected in Taiwan, Vietnam, Cambodia, Thailand, and Laos.

• Aviation: Cathay group on track to reach 100% pre-pandemic flights by Q1 2025; continued investment in fleet and digital initiatives.