Swire Pacific Limited Class A · HKEX:19
Swire Pacific Limited Class A — Swire Pacific Ltd A — H1 2022 Earnings Presentation
51 slides from Swire Pacific Limited Class A's earnings presentation, Aug 11, 2022
Slide 1: Interim Results Analyst Briefing
2022 INTERIM RESULTS ANALYST BRIEFING 11th August 2022 | Hong Kong
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 1H2022 Financial Performance Business Review Sustainability and ESG Update Outlook Q&A 3
Slide 4: Financial Highlights and Group Corporate Strategy
FINANCIAL HIGHLIGHTS AND GROUP CORPORATE STRATEGY Guy Bradley, Chairman
Slide 5: Swire Pacific – 2022 First Half Performance
SWIRE PACIFIC – 2022 FIRST HALF PERFORMANCE Focused on Greater China and South East Asia, where the Company seeks to grow its three core divisions and make new investments in growth areas such as healthcare. Challenging business environment adversely affected by COVID-19, inflation and increased eco
Slide 6: 1H2022 Performance Highlights
1H2022 PERFORMANCE HIGHLIGHTS A difficult first half due to COVID-19 Underlying Profit HK$1,729m Jun 2021: HK$1,256m Recurring Underlying Profit HK$1,249m Jun 2021: HK$786m Note: Refer to slide 14 for detailed reconciliation of underlying and recurring underlying profits. 6
Slide 7: Resilience Shown by Our Three Core Divisions
RESILIENCE SHOWN BY OUR THREE CORE DIVISIONS Recurring Underlying Profit PROPERTY BEVERAGES AVIATION 1H2022: HK$(2.2)Bn 1H2021: HK$(2.9)Bn (1) 22% HAECO HAECO CX and 1H2022: HK$3.0Bn 1H2022: HK$1.2Bn subsidiaries CX and 1H2021: HK$3.0Bn 1H2021: HK$1.5Bn subsidiaries CX associates 22% CX associates (
Slide 8: Strong Financial Position and Increased Dividends
STRONG FINANCIAL POSITION AND INCREASED DIVIDENDS Gearing Ratio Underlying Cash Interest Cover Dec 2021: 11.9% 13.6% Dec 2021: 6.2 times 6.6 times Allows for investment potential If gearing maintained below 30% HK$52.7Bn Dividend per ‘A’ Share Jun 2021: HK$1.00 HK$1.15 8
Slide 9: 1H2022 Dividends and Share Buyback
1H2022 DIVIDENDS AND SHARE BUYBACK Dividend Policy To deliver sustainable growth in dividends and to pay out not less than half of our recurring underlying profit (excluding our share of the results of Cathay Pacific, but including all dividends received from that company) by way of ordinary dividen
Slide 10: 1H2022 Financial Performance
1H2022 FINANCIAL PERFORMANCE Martin Murray, Finance Director
Slide 11: 1H2022 Financial Summary
1H2022 FINANCIAL SUMMARY Recurring Underlying Profit Underlying Profit Statutory Profit/(Loss) Jun 2021: HK$786m Jun 2021: HK$1,256m Jun 2021: HK$(792)m Jun 2022: HK$1,249m Jun 2022: HK$1,729m Jun 2022: HK$1,891m Revenue Equity Attributable to Dividends per Share Jun 2021: HK$46,738m the Company’s S
Slide 12: 1H2022 Financial Summary – Return on Equity
1H2022 FINANCIAL SUMMARY – RETURN ON EQUITY 5-year 1H2022 1H average Return on Equity Return on Equity 0.7% 1.1% Derived from: 11% Recurring underlying profit 0.4% 0.7% Net non-recurring items 0.2% -0.5% 9% Net property valuation adjustments 0.1% 0.9% 7% Recurring Remeasurement Property Disposal and
Slide 13: 1H2022 Financial Summary – Profit/(Loss) by Division
1H2022 FINANCIAL SUMMARY – PROFIT/(LOSS) BY DIVISION Underlying Profit/(Loss) Recurring Underlying Profit/(Loss) Jun 2022 Jun 2021 Jun 2022 Jun 2021 HK$M HK$M HK$M HK$M Property 3,378 3,682 2,971 3,029 Beverages 1,152 1,471 1,152 1,471 Aviation - Cathay Pacific group (1) (2,385) (3,543) (2,385) (3,1
Slide 14: Reconciliation of Underlying and Recurring Underlying Profits
1H2022 FINANCIAL SUMMARY – RECONCILIATION OF UNDERLYING AND RECURRING UNDERLYING PROFITS Jun 2022 Jun 2021 HK$M HK$M Attributable profit/(loss) 1,891 (792) Adjustments in respect of investment properties (162) 2,048 Underlying profit attributable to the Company’s 1,729 1,256 shareholders Significant
Slide 15: 1H2022 Improvement in Underlying Profit
1H2022 IMPROVEMENT IN UNDERLYING PROFIT HK$M Substantial Reduced 2,000 Lower retail rental reduction of losses at income from Hong loss at Cathay Swire Kong partly offset COVID-19 Pacific Resources 10 1,729 by higher retail adversely 88 65 rental income from the Chinese affecting sales (except in th
Slide 16: Strong Financial Position
1H2022 FINANCIAL SUMMARY – STRONG FINANCIAL POSITION Net Debt Movements (HK$Bn) Gearing Ratio Net debt at 1st January 2022 38.7 HK$M Cash from operations (6.1) 400,000 25 Disposal proceeds (1.0) 350,000 19.3 20 300,000 15.8 15.2 Capex and investments 7.3 250,000 13.8 13.6 15 200,000 Net dividends pa
Slide 17: Healthy Liquidity
1H2022 FINANCIAL SUMMARY – HEALTHY LIQUIDITY Dec 2019 Dec 2020 Dec 2021 Jun 2022 Change % HK$M HK$M HK$M HK$M (Jun 22 vs Dec 21) Bank balances and short-term deposits 21,345 29,264 22,894 13,597 -41% Total undrawn facilities - Committed 18,686 32,971 24,219 25,464 +5% Group committed liquidity 40,03
Slide 18: Business Review
BUSINESS REVIEW Guy Bradley, Chairman Karen So, Managing Director, Swire Coca-Cola
Slide 19: Property
PROPERTY DF@ Swire PACIFIC
Slide 20: 1H2022 Overview – Property
1H2022 OVERVIEW Solid performance with the Chinese Mainland performing strongly in the first quarter Recurring underlying profit of HK$3,623m, compared with HK$3,693m in 1H2021 Reflecting lower retail rental income from Hong Kong and higher operating costs, partly offset by higher retail rental inco
Slide 21: 1H2022 Overview – Property Underlying Profit
1H2022 OVERVIEW UNDERLYING PROFIT (100% BASIS) MOVEMENT IN UNDERLYING PROFIT (100% BASIS) HK$M HK$M 5,000 Total 4,600 $4,490 Total -8% $4,120 4,500 4,490 (65) 4,000 797 6 (14) 3 (300) 497 4,400 3,000 4,300 2,000 4,200 3,693 3,623 4,120 -2% 4,100 1,000 4,000 1H2021 Decrease in Decrease in Increase in
Slide 22: Chinese Mainland Portfolio
CHINESE MAINLAND PORTFOLIO Significant contribution from Taikoo Li and Taikoo Hui brands. Chinese Mainland overall portfolio contributed 39% of attributable gross rental income in 1H2022. Chinese Mainland retail is the second largest rental contributor. Chinese Mainland Attributable Gross Rental Inc
Slide 23: Scaling Up Chinese Mainland Development
SCALING UP CHINESE MAINLAND DEVELOPMENT SEVENTH DEVELOPMENT TAIKOO LI XI’AN OPENING IN REVITALISING ZHANGYUAN (1) INTO A VIBRANT 2025 LIFESTYLE HUB ADJACENT TO HKRI TAIKOO HUI Artist Impression INDIGO PHASE TWO OPENING IN 2025 AND 2026 OPENING OF SANLITUN WEST AND TAIKOO LI QIANTAN Artist Impression
Slide 24: Hong Kong Portfolio
HONG KONG PORTFOLIO EXPANSION OF TAIKOO NEW GRADE-A OFFICE EIGHT STAR STREET THREE RESIDENTIAL TRADING PLACE WITH ACQUISITION OF TOWER NEAR THREE ACHIEVING RECORD SALES DEVELOPMENTS IN HONG ZUNG FU INDUSTRIAL PACIFIC PLACE KONG, INCLUDING A NEWLY BUILDING ACQUIRED PLOT OF LAND IN WAN CHAI EIGHT STAR
Slide 25: South East Asia Portfolio
SOUTH EAST ASIA PORTFOLIO SAVYAVASA DEVELOPMENT IN JAKARTA TWO MINORITY INVESTMENTS IN HO CHI MINH CITY Savyavasa The River ArtistImpression Artist Impression Empire City Artist Impression Artist Impression Artist Impression Artist Impression 25
Slide 26: Beverages
BEVERAGES BEVERAGES
Slide 27: Investing for Growth and Diversity
INVESTING FOR GROWTH AND DIVERSITY Greater China USA Vietnam and Cambodia Restructuring of the 15% increase in franchise population to 876 Fast-growing and still beverage million in Swire franchise territories developing markets production facilities Synergies with legacy markets – commercial Low pe
Slide 28: 1H2022 Overview – Beverages
1H2022 OVERVIEW Mixed results with input cost pressure and COVID-19 lockdowns in the Chinese Mainland USA profit increased by 34%. Revenue increased reflecting price increases and strengthening of execution capability. Chinese Mainland profit decreased by 41%. COVID-19 HK$1.2Bn lockdowns reducing re
Slide 29: Geographic Diversity
GEOGRAPHIC DIVERSITY 67% ATTRIBUTABLE PROFIT 53% HK$M 4% 1H2022 3% 1,800 Total 1H2022 $1,471 CATEGORY REVENUE 60 Total 10% 1,400 71 $1,152 7% 40% 3%5% 8% 53 62 Sparkling Juice Energy drinks Chinese Mainland Hong Kong 1,000 Water Tea Other still Taiwan USA 1,002 586 600 KEY FINANCIAL DATA HK$M Jun 20
Slide 30: Adverse Effect of COVID-19 in Chinese Mainland
ADVERSE EFFECT OF COVID-19 IN CHINESE MAINLAND BUT SIGNIFICANT IMPROVEMENT IN THE END OF 1H2022 ▪ Revenue increased by 0.5% and volume decreased by 8%. EBITDA margin decreased to 11.1% from 12.4% in 1H2021. HK$M REVENUE BY REGION EBITDA MARGIN BY REGION 20,000 16% % growth in HK dollar terms 14.1% 1
Slide 31: Aviation
SN sy ey N AVIATION “4 DF@ Swire PACIFIC
Slide 32: 1H2022 Aviation Overview
1H2022 AVIATION OVERVIEW ATTRIBUTABLE PROFIT/(LOSS) KEY FINANCIAL DATA HK$M HK$M Jun 2022 Jun 2021 Change % 1,000 Total Total $(3,254) HAECO group $(2,236) 0 310 166 Revenue 6,557 5,402 +21% (676) (1,000) (457) Attributable/Recurring profit 166 310 -46% (2,264) (1,117) Share of post-tax loss from an
Slide 33: Hong Kong's Aviation Environment
HONG KONG’S AVIATION ENVIRONMENT Aviation environment remains subdued, but the latest passenger numbers are encouraging Hong Kong’s aviation Passenger Heavily impacted by COVID-19 market was performing volumes impacted 8,000 strongly before the by HK social Monthly Air Passengers in Hong Kong summer
Slide 34: 1H2022 Overview – Cathay Pacific
1H2022 OVERVIEW – CATHAY PACIFIC Attributable (loss)/profit Average monthly cash burn Liquidity (HK$Bn) 2.1 (HK$Bn) (HK$Bn) (5.0) +0.2 32.8 30.3 28.6 26.7 <0.1 0.9 15.4 1.8 (7.6) (9.9) 2.9 (11.8) 1H 2H 1H 2H 1H Jun Dec Jun Dec Jun 1H 2H 1H 2H 1H 2020 2020 2021 2021 2022 2020 2020 2021 2021 2022 2020
Slide 35: 1H2022 Overview – Cathay Pacific
1H2022 OVERVIEW – CATHAY PACIFIC Preparing for recovery Aircraft parked overseas are being gradually brought back to Hong Kong. Cathay Pacific commenced a recruitment plan to hire more than 4,000 front-line employees to meet the airline’s operational needs over the next 18-24 months. Cathay Pacific’
Slide 36: 1H2022 Overview – HAECO
1H2022 OVERVIEW – HAECO HAECO profit decreased due to the absence of financial assistance provided by the US government. Profit increased disregarding the non-recurring government subsidy, reflecting a recovery in demand for engine overhaul and more airframe base maintenance. Line maintenance in Hon
Slide 37: Healthcare
HEALTHCARE ‘*
Slide 38: Healthcare
HEALTHCARE Investing HK$20Bn by 2030 Healthcare investments were adversely affected by COVID-19 Columbia China Healthcare • Opening of Suzhou senior living facility in January 2022 • Increased operations at Wuxi Kaiyi Hospital and Jiaxing Kaiyi Hospital celebrated its first anniversary in May 2022 D
Slide 39: Sustainability and ESG Update
SUSTAINABILITY AND ESG UPDATE Guy Bradley, Chairman
Slide 40: Sustainability and ESG Update
SUSTAINABILITY AND ESG UPDATE TARGETS PROGRESS 50% reduction in greenhouse gas emissions (1) by 2030, and Net-Zero by 2050 ▪ Property: Secured three more sustainability-linked loan facilities, totalling HK$3.5Bn. 65% waste diversion from landfill (2) by 2030, and Zero Waste to landfill by 2050 ▪ Bev
Slide 41: Outlook
OUTLOOK Guy Bradley, Chairman
Slide 42: Outlook
OUTLOOK Short-term challenges remain but we are optimistic about our medium and long-term prospects. The Swire Properties Taikoo Hui and Taikoo Li brands are well-established and sought after in the Chinese Mainland. Taikoo Place continues to strengthen its position as a global business district. Sw
Slide 43: Q&A
Q&A 11th August 2022 | Hong Kong
Slide 44: Interim Results Analyst Briefing
2022 INTERIM RESULTS ANALYST BRIEFING 11th August 2022 | Hong Kong
Slide 45: Appendix
Appendix 11th August 2022 | Hong Kong
Slide 46: Swire Pacific at a Glance
SWIRE PACIFIC AT A GLANCE Swire Pacific is a Hong Kong-based international conglomerate with a diversified portfolio of market leading businesses and a long history in Greater China, where the name Swire has been established for over 150 years New investment to drive growth while divesting non-core
Slide 47: Property Division
PROPERTY DIVISION Solid performance despite challenges 1H2022 Attributable Recurring Underlying Profit 7 One of the largest 1 HK$2,971M 2,200+ Working population commercial landlords and operators of retail Retail-led mixed-use projects in Chinese Mixed-use • Higher retail rental income from the Chi
Slide 48: Beverages Division
BEVERAGES DIVISION Selling products of The Coca-Cola Company to a franchise population in Greater China and the USA Exclusive right to manufacture, market and distribute products of The Coca-Cola Company (TCCC) 60 beverage brands 1H2022 Recurring Underlying Profit 11 provinces and the Extensive area
Slide 49: Aviation Division
AVIATION DIVISION Results improved despite difficult environment Cathay Pacific Group HAECO Cathay Pacific HK Express Air Hong Kong Aircraft maintenance and 1H2022 Recurring Underlying Loss 17 modification work: 119 188 26 Asian cities for • Hong Kong (HK$2,236M) | HAECO Hong Kong 22% Destinations (
Slide 50: Healthcare
HEALTHCARE Continue to seek investment opportunities in healthcare services Premium Healthcare Services Focus on Healthcare Investment in Prime Locations Continue to seek 3 Strong strategic Associate investments investment opportunities partnerships with local in the healthcare sector in the in majo
Slide 51: Interim Results Analyst Briefing
2022 INTERIM RESULTS ANALYST BRIEFING 11th August 2022 | Hong Kong