Swire Pacific warns of lower full-year profit as Cathay woes linger

Hong Kong-listed conglomerate sees no sign of earnings rebound at aviation unit in second half of 2016

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Cathay’s business will continue to be an overhang on Swire’s profitability. Photo: AP

Published: 10:52pm, 10 Nov 2016Updated: 11:39pm, 10 Nov 2016

Hong Kong-listed conglomerate Swire Pacific said on Thursday that it expects lower full-year profit as its aviation unit, Cathay Pacific, will continue to post profit declines during the second half of the year due to overcapacity and stiff competition.

Swire said Cathay, in which it holds a 45 per cent stake, was unlikely to post better second-half earnings after it suffered an 82 per cent drop in interim profit.

“Passenger yields will remain under pressure. Cargo demand will continue to be affected by overcapacity and a fragile economy. The benefit from lower fuel prices will continue to be partially offset by fuel hedging,” it said in a statement on Thursday.

Swire, whose businesses range from aviation, property, trading and marine services, did not disclose the expected decline in its full-year profit.

The company said in August that its underlying profit, which excluded property revaluation items, fell 27 per cent to HK$3.55 billion.

It attributed the decline to poor results from its various units and the absence of profits from the sale of units at its Opus Hong Kong luxury residential development at the Mid-Levels during the period.