Swire Pacific Ltd, a Hong Kong-based conglomerate that controls Cathay Pacific Airways and owns many of prime commercial properties in the city, said its first-half underlying profit more than doubled, thanks to strong rental income and earnings from Cathay.

Underlying profit, which excludes property revaluation gains and related taxes, stood at HK$8.91 billion, up from HK$3.8 billion a year earlier, the conglomerate said in a statement filed with the Hong Kong stock exchange Thursday.

Meanwhile, net profit for the six months ended June came in at HK$13.95 billion, up 332 percent from the HK$3.23 billion in the same period last year.

The increase in underlying profit reflects "both strong results from the property division and the Cathay Pacific Airways group, inclusion of certain substantial non-recurring items," said Swire's Chairman Christopher Pratt.

Swire's shared post-tax profit from Cathay Pacific jumped 650 percent from a year ago to HK$2.1 billion after the carrier unit staged a strong rebound along with the global economic recovery during the period.

The conglomerate's earnings were also boosted by a HK$2.55 billion gain after it raised its interest in jet-maintenance firm Hong Kong Aircraft Engineering Co to 76 percent from 46 percent.

Swire said it will pay an interim dividend of HK$1 per "A" share compared with HK$0.6 in the previous year, and an interim dividend of HK$0.2 per "B" share, compared with HK$0.12 a year ago.

Cusson Leung, an analyst with Credit Suisse, said Swire's interim results were largely in line with market forecast and the higher declared dividends have been widely expected given Cathay Pacific's strong contribution.

Underlying profit from the property division was up 33.2 percent to HK$2.5 billion as gross rental income rose 9 percent to HK3.9 billion, reflecting a strong recovery in the local office market, the company said.

Cathay Pacific reported Wednesday a net profit of HK$2.1 billion for the six months ended June, up over 700 percent from a year ago as both passenger and cargo businesses rebounded strongly.

Swire's beverage and marine services business, however, slumped 28 percent and 52 percent, respectively, in terms of underlying profit, as margins fell due to competition.

"Overall, the group is relatively optimistic about its prospects in the second half of the year," said Pratt in a statement.

Pratt forecasts the group's property business will remain strong in the second half, so as the airline unit. He expects beverage sales to grow, helped by promotional activities and product innovations. But he remains pessimistic about the offshore business.

"I believe there won't be too many surprises in the second half either, though I expect investors to increasingly focus on the company's property development pipeline," Credit Suisse's Leung said.

Swire shares have gained 4.3 percent this year, against a 1.5 percent loss in the city's benchmark Hang Seng Property Index. The stock dropped 0.1 percent to HK$98 at close Thursday.

China Daily

(HK Edition 08/06/2010 page3)