HONG KONG: The outlook for Swire Pacific’s marine services business is a challenging one, while its property and aviation are ahead.
According to a research note from Nomura, with regard to Swire Pacific’s marine services business, the low oil price and consequent pressure on oil companies’ exploration activities should continue to put downward pressure on the utilisation rate of Swire’s fleet (it already saw a decline of 2.3pp to 86.6% in 2014) and charter hire rates upon contract renewals.
The division saw its earnings decline by 18% y-y in 2014 with a steeper decline in 2H14 of 32% y-y — we expect this earnings down-cycle to persist for the next two years.
