Swire Pacific Looks to China, Hong Kong for Recovery After Loss

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Swire Pacific Ltd., the 204-year-old British trading firm based in Hong Kong, said its recovery is tied to growth in Asia’s financial hub and the Chinese mainland after months of political turmoil and the coronavirus pandemic tipped it into its first half-yearly loss since 2008.

The group, whose businesses span real estate, beverages and aviation and which controls Cathay Pacific Airways Ltd., reported a net loss of HK$7.74 billion ($1 billion) for the six months through June.

“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 a stock exchange filing on Thursday.

The conglomerate is among local firms worst hit by Hong Kong’s troubles that started more than a year ago. Political protests against China’s tightening grip, a recession and the latest blow from the coronavirus pandemic have hit some of its core businesses including aviation. Jardine Matheson Holdings Ltd., the other British trading house with roots in Hong Kong, last month reported a 49% drop in underlying profit and said uncertainty is likely to persist.

Swire Pacific Looks to China, Hong Kong for Recovery After Loss

On Wednesday, Swire’s crown jewel Cathay, which contributed about 8.4% of the group’s profit last year, reported a first-half net loss of HK$9.9 billion and said passenger revenue tumbled 72%. In June, the carrier unveiled a HK$39 billion bailout that gives the Hong Kong government a 6.08% stake in the company and two observers on its board.

The first six months of 2020 were the most challenging Cathay had ever faced in its 70-year history, Swire said in his statement. Property and beverages businesses helped limit Swire Pacific’s losses, he said.

Here are the key highlights representing each business division’s attributable profit or loss to Swire’s shareholders:

Division1H’20201H’2019Change
PropertyHK$857 millionHK$7.3 billion-88%
Aviation-HK$3.9 billionHK$1.1 billion--
BeveragesHK$946 millionHK$748 million+26%
Trading & Industrial-HK$32 million-HK$114 million--
Marine Services-HK$5 billion-HK$611 million--

Shares of Swire have plunged 42% this year, compared with about a 10% drop in the benchmark Hang Seng Index. The stock gained 1.3% to HK$41.85 as of 1:26 p.m. local time on Thursday.

©2020 Bloomberg L.P.

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