• Swire Pacific Limited and Swire Properties Limited announce 2021 final results

    11 March 2022

    (按此瀏覽中文版)

    Opening remarks by Guy Bradley, Chairman of Swire Pacific Limited and Swire Properties Limited:

    Good afternoon everyone. I am delighted to be talking to you today for the first time as Chairman of Swire Pacific and Swire Properties. Thank you for joining this live webcast.

    Firstly, I would like to update you on our overall performance. After that Martin, Tim and I will be happy to take any questions you may have.

    Whilst still being impacted by the COVID-19 pandemic, Swire Pacific made a significant turnaround and returned to profitability, with an underlying profit of HK$5,300 million. This robust performance underscores the strength and resilience of our business. Reflecting the solid performance and our confidence in the business, we have increased our full year dividends by 53%.

    During the year we continued our strategy of focusing on three core divisions: Property, Beverages and Aviation, all deeply embedded in Greater China and well-positioned to tap into the growth in consumer spending in their core markets. We also increased our investment in healthcare in the Chinese Mainland.

    We recently announced the disposal of Swire Pacific Offshore. With this disposal, and the earlier sale of our interest in Hongkong United Dockyards (HUD), we will no longer operate any marine services business. This is in line with our strategy of reducing exposure to non-core assets and recycling capital to focus on core businesses that have strong growth opportunities in Greater China and South East Asia.

    Over the last few years we prudently managed our Balance Sheet and our gearing now sits at 11.9%. This financial strength leaves us well-positioned to pursue a compelling growth strategy on an exciting pipeline of projects, which I will touch on later.

    Let me now talk briefly about the performance of each of our core divisions, starting with Properties.

    Swire Properties reported solid financial results in 2021, demonstrating the resilience of the business. Whilst there was a decrease in underlying profit, due to lower profits from the sale of non-core properties, Swire Properties recorded a modest increase in recurring underlying profit, reflecting a strong retail performance in the Chinese Mainland, and reduced losses from the hotel business.

    Our Hong Kong office portfolio delivered solid returns, with high occupancy rates and stable demand. There was a rebound in Hong Kong’s retail market in 2021. However, the overall market remains challenging, with the pace of recovery impacted by the fifth wave of the pandemic.

    Our commercial property portfolio in the Chinese Mainland delivered strong returns in 2021, reflecting the strength of our Taikoo Li and Taikoo Hui brands. We opened our sixth development, Taikoo Li Qiantan, in Shanghai in September 2021. During its launch, Taikoo Li Qiantan achieved a record high opening rate, footfall and sales compared across all of our Chinese Mainland malls. We also opened Taikoo Li Sanlitun West in December 2021, a retail extension to our Taikoo Li Sanlitun complex in Beijing.

    This year marks an important new chapter for Swire Properties as it celebrates its 50th anniversary. We are well positioned to embark on a compelling growth strategy, with an ambitious investment pipeline of over HK$100 billion focusing on Hong Kong, the Chinese Mainland and South East Asia over the next ten years.

    In Hong Kong, we are keen to play our part in reinforcing the city’s status as a global financial hub. To that end, we aim to invest one-third of the HK$100 billion in Hong Kong to expand and reinforce Taikoo Place and Pacific Place.

    In the Chinese Mainland, our reputation for placemaking has opened up exciting opportunities to expand our footprint in cities where we already have a presence, and to pursue new opportunities. We recently announced a RMB7 billion commitment to develop Taikoo Li Xi’an, which will be our seventh development in the Chinese Mainland and first in the ancient capital city of Xi’an. The project will be a retail-led mixed-use development, located at the Small Wild Goose Pagoda historical and cultural zone in Beilin District of Xi’an.

    We are also actively exploring residential trading opportunities across our core markets. We will continue to leverage our premium residential brand, and we are building a strong pipeline with 10 projects under development in our core markets.

    Turning now to Beverages, where we continued to see strong growth momentum. Swire Coca-Cola reported a record profit of HK$2,549 million in 2021, 23% higher than in 2020. Revenue growth in the Chinese Mainland and the USA was particularly strong and buoyant, driven by strong consumer demand. The record profit reflected strengthened execution capabilities, improved distribution infrastructure and investment in digital innovation.

    We are investing RMB900 million in a new greenfield plant in ZhengZhou, Henan Province. This is the largest single investment ever made by Swire Coca-Cola in the Chinese Mainland, where we have a long-term investment plan to commission a new high-speed production line roughly every 4 months and a greenfield plant every two years for the next decade. In 2021, we commissioned a HK$220 million state-of-the-art aseptic PET line in Hong Kong to support the launch of a wide range of innovative new sparkling and still products, and to reduce carbon footprint through local production of light weight bottles. We will continue to invest in Swire Coca-Cola to create a strong and sustainable business.

    In the Aviation Division, despite the challenging operating environment, Cathay Pacific substantially reduced losses in 2021 by 74%. It achieved a profit in the second half of the year, which was a remarkable turnaround. The improved performance was driven by a strong cargo business and effective cost management. The airline’s liquidity is healthy, which helps the company overcome the ongoing challenges and allow it to emerge from the pandemic as a more efficient and competitive airline than before. The significant improvement in results would not be possible without the professionalism and commitment of the whole Cathay team. What they have been through during the past two years is without precedent, and I thank them for their tireless efforts in keeping Hong Kong connected.

    HAECO reported an increase in profits despite the impact of COVID-19. There was a recovery in base maintenance work as US and European airline customers flew more as global travel started to recover. The company is investing in the relocation of its Xiamen operations, which will be completed in 2026.

    During the year, the Group made further investments in the healthcare sector – an investment in Shenzhen New Frontier United Family Hospital, a premium private hospital, and in DeltaHealth, a healthcare provider in Shanghai specialising in cardiovascular care. We are determined to build a significant healthcare business and plan to invest HK$20 billion in this fast-growing sector by 2030.

    As COVID-19 continues to impact city life in Hong Kong, we are committed to doing all we can to help protect and support our communities. A notable example is Swire Properties. They are offering a full rental waiver up till 20 April this year to tenants who were mandated to close by the Government during the fifth wave. While the recent outbreak of Omicron variant has brought undoubted challenges to Hong Kong society, we believe that Hong Kong will be able to overcome the pandemic with the full support of the Central Government. We look forward to a healthy recovery of our home city as we celebrate the 25th anniversary of the establishment of the Hong Kong SAR.

    Last but not least, I would like to salute all our people for the tremendous teamwork, dedication and professionalism which they continue to show in response to the challenges arising from COVID-19. With such strength and resilience, we have withstood the many challenges and remain well placed to thrive when we emerge from the pandemic.

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