Swire Pacific Limited

Swire Pacific said recurring underlying profit in the first half was HKD 7 billion, up 48%, and underlying profit was HKD 7.8 billion, up 43% year over year. The first interim dividend was increased 15% to HKD 1.50 per A share. By division, recurring underlying profit rose 37% in property, 5% in beverages, and 39% in aviation. Swire Coca-Cola reported first-half recurring attributable profit of HKD 907 million, up 5%, with Mainland China recurring profit up 24% to HKD 727 million; Vietnam and Cambodia were HKD 98 million, Thailand and Laos HKD 95 million, and Hong Kong HKD 58 million. EBITDA for Swire Coca-Cola increased 11% and margin improved from 12.8% to 12.9%. Management said the HKD 100 billion property plan is almost 70% committed, gearing is 19.3%, debt is down 4%, weighted average cost of debt is 3.4%, and 75% of borrowing is fixed rate. Forward guidance was constructive: management expects improving consumer sentiment to continue into the second half, positive momentum across property portfolios, continued strong demand at HAECO and Cathay, and ongoing margin improvement at Swire Coca-Cola, while noting cost pressure from aluminum, oil, and logistics in the beverage business.

Chairman Guy Bradley framed the half as a very strong one, emphasizing that first-half recurring underlying profit was the highest the group has reported and that improving consumer sentiment was the main driver. He stressed that Swire Pacific is still investing aggressively, citing record capital deployment across the group and a property pipeline with seven projects under development in the Chinese Mainland. His tone was upbeat and confident, with a view that the better sentiment and investment program should carry through the rest of the year.

Finance Director Martin Murray focused on the quality of earnings, cash generation, and balance-sheet strength. He said stronger profits led to strong cash flow, reduced gearing, and the ability to sustain the 15% higher dividend while continuing record investment; he also noted debt is down 4%, gearing is 19.3%, weighted average cost of debt is 3.4%, and 75% of borrowings are fixed rate. He pointed to refinancing work on debt maturing in 2028 and 2029 and said the team is looking to push that out to 2031 and 2032, while keeping dividend growth ahead of any share buyback consideration.

Analysts asked whether the Cathay exchangeable bond would likely need repayment given Cathay's stronger share price, and whether a similar structure could be used for Swire Properties; management said the instrument was attractively priced, gives flexibility, and there is no discussion of doing something like that for Swire Properties. Questions also focused on the 15% dividend increase and whether Cathay's higher payout would be passed through faster, but management said Swire Pacific will keep prioritizing strategic investment and a progressive dividend, with share buybacks also under consideration. On Coca-Cola, analysts probed Mainland China strategy and margin outlook; management said growth is coming from shifting consumption toward e-commerce, immediate consumption, and smart coolers, and warned that second-half cost pressure from aluminum and logistics will remain but will be offset through pricing, channel mix, and cost initiatives.