Swire Properties, Pacific fear substantial slump

Swire Properties (1972) and parent Swire Pacific (0019) expect to record substantial declines in first-half net profit, the two companies said yesterday.

Swire Properties projects its net profit for the first half this year to slump, dragged by losses of revaluation of investment properties and its hotel business and falling profits from the sale of investment properties.

A HK$2.6 billion loss on revaluation of investment properties is expected in the first six months, compared with a gain of HK$3.6 billion a year ago, as the pandemic hits the valuation of local investment properties and retail investment properties in the United States, the company said.

But the overall performance of Swire Properties' investment portfolios remains solid and well placed to withstand the pandemic, thanks to a balanced portfolio and strong balance sheet, the company's spokesperson said.

Meanwhile, Swire Pacific, which holds 82 percent stakes in Swire Properties and controls 45 percent in Cathay Pacific Airways (0293), said its first-half recurring results were likely to be "materially worse" than those for the first half last year.

Cathay Pacific expected a substantial loss in the first half of 2020 before the HK$39 billion bailout from the SAR government. The local carrier reported an unaudited loss of HK$4.5 billion at the full-service airline level for the first four months this year.

Swire Pacific also expects its subsidiary Swire Pacific Offshore to continue making a recurring loss during the period, with estimated impairment charges of HK$4.3 billion, demand for oil has fallen significantly amid the pandemic.