Swire Pacific Limited Class A · HKEX:19
Swire Pacific Limited Class A — Swire Pacific Ltd A — H1 2023 Earnings Presentation
41 slides from Swire Pacific Limited Class A's earnings presentation, Aug 10, 2023
Slide 1: Interim Results Analyst Briefing
DI4@ Swire PACIFIC INTERIM RESULTS ANALYST BRIEFING 10TH AUGUS
Slide 2: Disclaimer
DISCLAIMER This document has been prepared by Swire Pacific Limited (the “Company”, and together with its subsidiaries, the “Group”) solely for information purposes and information in it has not been independently verified. No representation or warranty, express or implied, is made as to, and no rel
Slide 3: Agenda
AGENDA ‣ FINANCIAL HIGHLIGHTS AND GROUP CORPORATE STRATEGY ‣ 1H2023 FINANCIAL PERFORMANCE ‣ BUSINESS REVIEW ‣ SUSTAINABILITY AND ESG UPDATE ‣ OUTLOOK ‣ SALE OF SWIRE COCA-COLA, USA ‣ Q&A 3
Slide 4: Financial Highlights and Group Corporate Strategy
FINANCIAL HIGHLIGHTS AND GROUP CORPORATE STRATEGY GUY BRADLEY, CHAIRMAN
Slide 5: Swire Pacific – 2023 First Half Performance
SWIRE PACIFIC – 2023 FIRST HALF PERFORMANCE ‣ Rebound from all core divisions in the first half, the main driver is Aviation. ‣ Strong profits reported by Cathay Pacific at the airline and subsidiary level, partially offset by results from its associates. ‣ Announcement of the proposed sale of Swire
Slide 6: 1H2023 Highlights
1H2023 HIGHLIGHTS Recurring Underlying Profit 284% June 2022: HK$1.3Bn HK$4.9Bn Dividend per ‘A’ Share 4% June 2022: HK$1.15 HK$1.20 Recurring Underlying Profit 1H2023: HK$3.2Bn 1H2023: HK$1.6Bn 1H2023: HK$0.8Bn 1H2022: HK$3.0Bn 6% 1H2022: HK$1.2Bn 41% 137% 1H2022: HK$(2.2)Bn HAECO Profit CX and sub
Slide 7: Sale of Swire Coca-Cola, USA
SALE OF SWIRE COCA-COLA, USA Benefits of the transaction: ‣ Crystalises value at an attractive valuation whilst preserving franchise strength - The management services agreement will enable the Beverages Division to continue to strengthen its global franchise relationship with The Coca-Cola Company,
Slide 8: 1H2023 Financial Performance
1H2023 FINANCIAL PERFORMANCE MARTIN MURRAY, FINANCE DIRECTOR
Slide 9: 1H 2023 Financial Summary
1H 2023 FINANCIAL SUMMARY Statutory Profit Underlying Profit Recurring Underlying Profit June 2022: HK$1,914m June 2022: HK$1,752m June 2022: HK$1,272m June 2023: HK$4,221m 121% June 2023: HK$5,594m 219% June 2023: HK$4,879m 284% Revenue Equity Attributable to Dividends per Share June 2022: HK$44,80
Slide 10: 1H2023 Financial Summary – Profit/(Loss) by Division
1H2023 FINANCIAL SUMMARY – PROFIT/(LOSS) BY DIVISION RECURRING UNDERLYING UNDERLYING PROFIT/(LOSS) PROFIT/(LOSS) JUNE 2023 JUNE 2022 JUNE 2023 JUNE 2022 HK$M HK$M HK$M HK$M Property 3,195 3,401 3,188 2,994 Beverages 1,423 1,152 1,627 1,152 Aviation - Cathay group (1) 1,744 (2,385) 782 (2,385) - HAEC
Slide 11: 1H2023 Financial Summary – Reconciliation of Profits
1H2023 FINANCIAL SUMMARY – RECONCILIATION OF PROFITS JUNE 2023 JUNE 2022 HK$M HK$M STATUTORY PROFIT 4,221 1,914 Adjustments in respect of investment properties 1,373 (162) UNDERLYING PROFIT ATTRIBUTABLE TO THE COMPANY’S Gains on disposal 5,594 1,752 of Taikoo Shing SHAREHOLDERS carparks and Fort Lau
Slide 12: 1H2023 Substantial Increase in Underlying Profit
1H2023 SUBSTANTIAL INCREASE IN UNDERLYING PROFIT HK$M 6,000 82 (214) 235 5,594 3,070 5,500 Higher retail rental 5,000 Profit increase in income and the USA and the recovery of hotel 4,500 Chinese Mainland businesses in Hong and full-period Kong and the Increased contribution from Increase in 4,000 C
Slide 13: 1H2023 Financial Summary – Solid Financial Position
1H2023 FINANCIAL SUMMARY – SOLID FINANCIAL POSITION Net Debt Movements (HK$Bn) Gearing Ratio Net debt at 1st January 2023 Pro forma gearing ratio after disposal of 56.8 HK$M Swire Coca-Cola, USA decreases to % Cash from operations (7.2) 500,000 14.9% 30.0 450,000 23.0 Disposal proceeds (0.3) 25.0 40
Slide 14: 1H2023 Financial Summary – Healthy Liquidity
1H2023 FINANCIAL SUMMARY – HEALTHY LIQUIDITY DECEMBER DECEMBER DECEMBER JUNE CHANGE % 2020 2021 2022 2023 (JUNE 23 VS HK$M HK$M HK$M HK$M DECEMBER 22) Bank balances and short-term deposits 29,264 22,894 11,614 13,440 +16% Total undrawn facilities - Committed 32,971 24,219 21,510 22,483 +5% Group com
Slide 15: Business Review
BUSINESS REVIEW GUY BRADLEY, CHAIRMAN KAREN SO, MANAGING DIRECTOR, SWIRE COCA-COLA
Slide 16: Property – 1H2023 Overview
PROPERTY – 1H2023 OVERVIEW Robust recovery in the performance of retail and hotels in Hong Kong and the Chinese Mainland, while office market remains soft in Hong Kong ‣ Recurring underlying profit of HK$3,888m, compared with HK$3,652m in 1H2022 Reflecting recovery of hotel businesses and higher ret
Slide 17: Property – 1H2023 Overview
PROPERTY – 1H2023 OVERVIEW UNDERLYING PROFIT (100% BASIS) MOVEMENT IN UNDERLYING PROFIT (100% BASIS) HK$M HK$M Total Total -6% 5,000 5,000 $4,149 $3,897 9 4,500 (15) 168 (488) 4,000 4,149 67 497 16 3,897 4,000 3,000 3,500 2,000 3,652 3,888 3,000 +6% 2,500 1,000 2,000 1H2022 Increase in Increase in D
Slide 18: Property – Chinese Mainland Portfolio
PROPERTY – CHINESE MAINLAND PORTFOLIO ‣ A key contributor to revenue growth. ‣ Chinese Mainland overall portfolio contributed 40% attributable gross rental income in 1H2023. (1) ‣ Chinese Mainland retail is the second largest rental contributor. ‣ Chinese Mainland retail is further enlarged after 10
Slide 19: Property – Investing in Long-Term Growth
PROPERTY – INVESTING IN LONG-TERM GROWTH Good progress on HK$100Bn investment plan Taikoo Li Xi’an 50 Chinese Mainland Chinese Sanya Retail Project > HK$ Bn Mainland Increased stake at Taikoo Li Chengdu (1) HK$ 17 Bn HK$ 100 Bn > 30 Bn Hong Kong HK$ Increased stake at Citygate 100% ownersh
Slide 20: Property – Upcoming Projects
PROPERTY – UPCOMING PROJECTS Strong pipelines supporting continuous growth 8.2 M sq ft Expected Attri. GFA to be Completed from 2023 2023 2024 2025 2026 onwards Attri. GFA sq ft (7) HK Six Pacific Place LA MONTAGNE (1) Residential projects in Chai Wan and Wan Residential and office developme
Slide 21: Beverages – 1H2023 Overview
BEVERAGES – 1H2023 OVERVIEW CHINESE MAINLAND VIETNAM & CAMBODIA USA ► Accelerating portfolio expansion with ► Swire franchise territory population ► Continued to perform well though steady growth in high-value categories. increased to 877 million after the volume declined. acquisition of Vietnam and
Slide 22: Beverages – 1H2023 Overview
BEVERAGES – 1H2023 OVERVIEW EBITDA increased by 24% to HK$3,429m Chinese Mainland – EBITDA , excluding non-recurring item, increased by 2%. The increase in revenue was partly offset by higher raw material costs and operating expenses. USA – EBITDA increased by 45%. The increase in revenue, driven by
Slide 23: Beverages – Geographic Diversity
BEVERAGES – GEOGRAPHIC DIVERSITY ATTRIBUTABLE PROFIT 1H2023 CATEGORY 1H2023 REVENUE 66% HK$M Total 4% 2,000 $1,423 46% 4% 70 Total 1,500 $1,152 913 10% 1,000 554 39% 8% 1% 47 8% 6% 53 56 3% 5% 62 500 Sparkling Juice Energy drinks Chinese Mainland Hong Kong 651 Water Tea Other still Taiwan USA 586 Vi
Slide 24: Beverages – Strong Growth in 1H2023
BEVERAGES – STRONG GROWTH IN 1H2023 ‣ Revenue increased by 14% and volume increased by 18%. EBITDA margin increased to 12.3% from 11.1% in 1H2022. HK$M REVENUE BY REGION % growth in HK dollar terms EBITDA MARGIN BY REGION -1% % growth in local currency terms 16,000 +6% 15.9% 14,000 +13% 16% 14.6% +1
Slide 25: Aviation – 1H2023 Overview
AVIATION – 1H2023 OVERVIEW Significant improvement from Cathay group at airline level, partially offset by losses from associates ATTRIBUTABLE PROFIT/(LOSS) KEY FINANCIAL DATA Total HK$M June 2023 June 2022 Change % HK$M $1,796 4,000 HAECO group 63 3,000 82 Revenue 8,464 6,557 +29% 2,000 Total 3,023
Slide 26: Cathay Pacific – 1H2023 Overview
CATHAY PACIFIC – 1H2023 OVERVIEW Passenger numbers continue to increase at the Hong Kong international aviation hub Hong Kong’s aviation Passenger volumes Monthly Air Passengers in Hong Kong market was performing impacted by HK Heavily impacted by COVID-19 Passenger volumes start to 8,000 strongly b
Slide 27: Cathay Pacific – 1H2023 Overview
CATHAY PACIFIC – 1H2023 OVERVIEW Travel ► On track with training and recruitment. ► Announced intention to purchase up to 32 aircrafts for delivery by 2029. ► On track to achieve target of 70% pre-pandemic passenger flight capacity levels covering 80 destinations by the end of 2023 and expect to rea
Slide 28: HAECO – 1H2023 Overview
HAECO – 1H2023 OVERVIEW HAECO profit decreased due to a higher loss in the cabin solutions business and lower unrealised foreign exchange gains. Loss in cabin solutions business was mainly due to supply chain difficulties, higher cost of sales and freight costs and a higher provision for stock obsol
Slide 29: Healthcare
HEALTHCARE Growth and recovery from the impact of COVID-19 in the Chinese Mainland and Hong Kong Revenue YoY Growth 1H2023 1,500+ 5 5 5 Hospitals Senior living facilities Clinics 122% Registered beds Number of Outpatients Number of Inpatients +126% c.179k +145% c.10k ‣ Columbia China: Total inpatien
Slide 30: Sustainability and ESG Update
SUSTAINABILITY AND ESG UPDATE TARGETS PROGRESS 50% reduction in greenhouse gas emissions (1) by 2030, ‣ Climate: We are on track to cut our emissions by half by 2030 with emissions in the first and Net-Zero by 2050 six months of 2023 being similar to the same period last year. 65% waste diversion fr
Slide 31: Outlook
OUTLOOK ‣ Rebound seen in 1H2023 is expected to continue through 2H driven by Aviation. ‣ Subject to the approval of the independent shareholders, the disposal of Swire Coca-Cola, USA is expected to be completed in 2H2023, with an EGM expected in August/September. ‣ Remain confident on our long-term
Slide 32: Sale of Swire Coca-Cola, USA
SALE OF SWIRE COCA-COLA, USA GUY BRADLEY, CHAIRMAN
Slide 33: Transaction Highlights
TRANSACTION HIGHLIGHTS Illustrative Transaction Structure 1 Crystalises Value at an Attractive Valuation Whilst Preserving Franchise Strength John Swire & Other Swire Pacific • Attractive transaction multiple of 12.4x EV/ 2022 Adjusted EBITDA (2) Sons Limited shareholders • Gain on disposal of appro
Slide 34: Key Terms of the Transaction
KEY TERMS OF THE TRANSACTION • Sale of 100% interest in Swire Pacific Holdings Inc. to John Swire & Sons for an enterprise value of US$3.9Bn (HK$30.4Bn equivalent) in cash Key Terms • Swire Coca-Cola Limited, a wholly-owned subsidiary of the Company, to enter into a management services agreement wit
Slide 35: Realises Value at an Attractive Valuation and Returns Cash to Shareholders
REALISES VALUE AT AN ATTRACTIVE VALUATION AND RETURNS SUBSTANTIAL AND IMMEDIATE CASH TO SHAREHOLDERS EV/ EBITDA Multiple Offer Value vs. Swire Coca-Cola, USA Book Value Special Dividend(3) x HK$Bn Class A Special Dividend Per Share – HK$ 12.4x 30.4 22.6 7.30 8.120 3.00 ~50% distributed as Special Di
Slide 36: Strengthens Swire Pacific's Balance Sheet
STRENGTHENS SWIRE PACIFIC’S BALANCE SHEET Gearing Ratio June 2023: 21.4% Pro forma: 14.9% Net Debt Total Equity HK$Bn HK$Bn 66.9 22.6 323.8 312.9 11.7 48.2 (11.7) (30.4) Reported net debt Consideration Special dividend Pro forma net debt Reported total equity Gain on disposal Special dividend Pro fo
Slide 37: Preserve Franchise Strength Through Management Services Agreement
PRESERVE FRANCHISE STRENGTH THROUGH MANAGEMENT SERVICES AGREEMENT John Swire & Sons, Swire Coca-Cola Limited and Swire Pacific Holdings Inc. (Swire Coca-Cola, USA) will enter into the Management Services Agreement for an annual management fee Scope of Service Management Fee Term ► Swire Coca-Cola Li
Slide 38: Q&A
Q&A 10TH AUGUST 2023 | HONG KONG
Slide 39: Appendix
APPENDIX 10TH AUGUST 2023 | HONG KONG
Slide 40: 1H2023 Financial Summary – Return on Equity
1H2023 FINANCIAL SUMMARY – RETURN ON EQUITY 5-year 1H2023 1H average Return on Equity Return on Equity 1.6% 0.4% Derived from: 11% Recurring underlying profit 1.9% 0.8% Net non-recurring items 0.3% -0.2% 9% Net property valuation adjustments -0.6% -0.2% 7% Disposal Gain/ Property Disposal Dividends
Slide 41: Interim Results Analyst Briefing
Di Swire PACIFIC INTERIM RESULTS ANALYST BRIEFING 10TH AUGUST 2023 | HONG KONG