[ad_1]
HONG KONG – Merlin Swire, a sixth-generation clion, is trying to turn things around at Swire Pacific, a 200-year-old family business. But the increasing losses to the Hong Kong conglomerate's marine unit make it more difficult.
Swire took office as president of the company, with a capital of $ 14.9 billion, in July 2018. The company had recorded poor revenues for Cathay Pacific Airways and other units .
Net profit fell 9% year-on-year to reach 23.6 billion Hong Kong dollars ($ 3 billion) during the fiscal year up to December 2018, which is the first annual result since Swire took the helm. Underlying earnings – a gauge that eliminates fluctuations in the value of investment properties – rose 80% to HK $ 8.5 billion.
The company is well managed, despite the difficulties, said Swire at its first press conference as chairman.
Swire Pacific has a wide range of activities in mainland China and Hong Kong under the Taikoo brand. Its core businesses, airlines and beverage operations all worked well last year.
But the company's marine services activities, which provide support for the development of offshore oil fields, weighed on profits. Overabundance of the market puts downward pressure on rental costs.
Marine unit losses reached HK $ 5 billion, up 130% from the previous year. Swire said it would take at least two more years for the company to return to profitability, but added that this company is a major player in the marine services sector and that it is optimistic about the resumption of growth.
The other segments are more bullish. The real estate business benefited from the displacement of the center of Hong Kong due to soaring rents. Swire Pacific is the developer of the Taikoo Place shopping complex in Quarry Bay, in the north-east of Hong Kong Island.
Cathay Pacific returned to profitability for the first time in three years thanks to job cuts and other restructuring measures. The beverage sector, including the Coca-Cola bottling franchise, posted higher earnings excluding exceptional factors. Sales in mainland China jumped 23%.
Swire pointed out that the conglomerate would focus on its three core businesses, adding that it had sold peripheral activities last year.
He added that he had badumed the presidency to strengthen the company's ties with Hong Kong and that he was confident of continuing to invest in the company as a member of the founding family. His return to the territory marks his second badignment since 2004.
The renewed participation of the Swire family should help bring the group together, but some observers are skeptical about the president's ability to make decisions quickly.
The US-China trade niche and China's economic slowdown pose additional challenges for society.
It is common for founding families to retain control of large publicly traded companies in Hong Kong. Local mogul Li Ka-shing pbaded the reins of his son Victor after more than forty years at the head of the conglomerate of telecommunications, infrastructure and retail CK Hutchison Holdings. Real estate developer New World Development and casino operator Galaxy Entertainment Group also have powerful founding families.
Strict control allows these companies to develop long-term strategies and strong leadership, but also have disadvantages. Succession conflicts and potential corporate governance issues may arise.
In Hong Kong, three sons who took over the leadership of real estate developer Sun Hung Kai Properties quarreled for political and other reasons, and disputes between the women of the tycoon of Stanley Ho, Macau magnate and their 17 children, disrupted the activities of the casino operator SJM Holdings.
Source link
