Swire Pacific Limited

Swire Pacific said first-half recurring underlying profit was HKD 7 billion, up 48%, and underlying profit was HKD 7.8 billion, up 43%. The 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. In beverages, recurring attributable profit was HKD 907 million, up 5%; China was HKD 727 million, up 24%, Vietnam and Cambodia were HKD 98 million, down 13%, Thailand and Laos were HKD 95 million, down 10%, and Hong Kong was HKD 58 million, up 5%. EBITDA for beverages increased 11% and margin edged up from 12.8% to 12.9%. Management did not give formal next-quarter or full-year numeric guidance, but said it expects positive momentum across portfolios, continued consumer sentiment improvement into the second half, and ongoing margin pressure in beverages from elevated aluminum and energy costs, partly offset by commercial and cost initiatives.

Guy Bradley emphasized that the first half delivered the highest underlying profit the group has reported, driven by improving consumer sentiment across divisions and record levels of investment. He highlighted continued execution of the HKD 100 billion property plan, progress in beverage franchise integration in Southeast Asia, and major aviation investments, including HAECO's new Xiamen facility and expansion into Vietnam. His tone was upbeat and confident, saying the group expects the improved consumer backdrop to carry into the second half barring anything unexpected.

Martin Murray focused on financial strength and capital discipline. He said the business generated strong cash flow, reduced gearing to 19.3%, lowered debt by 4%, brought weighted average debt cost down to 3.4%, and kept 75% of borrowing fixed rate. He also noted nonrecurring items tied to Cathay-related share transactions, said refinancing due in 2028 and 2029 is being pushed out to 2031 and 2032, and reiterated that the group’s priorities are long-term investment, operational excellence, dividend growth, and potentially share buybacks in that order.

Analysts pressed management on the Cathay exchangeable bond, whether Swire would repay it if Cathay’s share price stays above the conversion price, and whether similar financing could be used for Swire Properties. Management said the bond was attractively priced and provides flexibility, but there has been no discussion of a similar structure for Swire Properties. Questions also focused on capital allocation now that gearing is lower; management said there is no change in strategy, that core-business investment remains the focus, and that the group is not looking for new non-core segments. On dividends, management said Cathay’s higher payout comes from a low base and that Swire Pacific expects dividends to remain strong, with share buybacks currently more favorable than altering the interim/final split.