Swire Properties (1972), the real estate arm of conglomerate Swire Pacific (0019), saw its adjusted underlying profit for 2012 surge by 59 percent to HK$6.93 billion thanks to sales at its AZURA residential project in Hong Kong.
“The increase in adjusted underlying profit…principally reflects a contribution of HK$1,834 million from property trading,” company chairman Christopher Pratt said in a stock exchange announcement Thursday.
He added increased profits also came from its property investments.
“This reflected positive rental reversions in Hong Kong, improved performance at Sanlitun Village and the first full year contribution from TaiKoo Hui development, offset in part by the loss of rental income following the disposal of Festival Walk and pre-opening expenses at INDIGO,” Pratt said.
The adjusted underlying profit excludes gains in valuation from investment properties, deferred tax and profit from disposal of investment properties.
The reported profit attributable to shareholders for the year to 31 December 2012, which includes the valuation gains, however fell by 25.3 percent to HK$18.76 billion.
Turnover leaped by 46.7 percent to HK$14.05 billion while operating profit dropped by 20.2 percent to HK$21.51 billion.
By segments, property investment continued to account for most of the unadjusted underlying profit with HK$5.08 billion recorded for 2012 with property trading profit at HK$1.83 billion as mentioned earlier.
The profit from hotels was a tiny HK$15 million compared with HK$100 million in 2011 which the company attributed to pre-opening expenses at the Mandarin Oriental in TaiKoo Hui and EAST, Beijing at INDIGO.
The company said it was cautiously optimistic on the outlook for its office and commercial properties in Hong Kong and China with rents expected to hold up but not so for property trading.
“Profits from property trading in Hong Kong are expected to be lower in 2013 than in 2012, but nevertheless significant, with the completion of the ARGENTA development and the expected sale of the remaining units at the AZURA development,” Pratt said.
Apart from Hong Kong, the company has development projects in Beijing, Guangzhou, Shanghai and Chengdu in China and also in Miami, USA.
For its trading portfolio in Hong Kong, apart from the ARGENTA project, the company also expects to complete the Mount Parker Residences and Dunbar Place projects in 2013.
While Swire Properties may have enjoyed a jump in adjusted underlying profit, its parent did not fare so well.
Swire Pacific reported a 51.7 percent plunge in underlying profit attributable to shareholders to HK$8.34 billion for the year to 31 December 2012.
If the profit on the sale of its Festival Walk mall in Kowloon Tong is excluded, then the underlying profit edged down by 3.8 percent to HK$8.34 billion.
The profit attributable to shareholders dived 45.7 percent to HK$17.48 billion.
The parent company blamed the fall in profits on “significantly lower profit” from its airline Cathay Pacific (0293) and also its beverage and trading and industrial businesses.
The airline saw its profit plunge to HK$412 million in 2012 from HK$2.41 million a year ago due mainly to the high price of jet fuel.