Low oil price was cited.
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.
Here's more from Nomura:
Property – Decentralised office rents at Island East should remain resilient thanks to high occupancy, which helps offset subdued demand for office space in Pacific Place, although the latter has no major leases expiring in 2015F.
Retail rents are likely to be soft owing to weaker luxury spending at Pacific Place but should be offset by stable contributions at Cityplaza and higher rental income from China.
Property development profits should also remain strong in 2015F owing to booking of profits from Arezzo and Chengdu Pinnacle One.
Aviation – management noted that the improvement in Cathay Pacific’s business in 2014 has continued into 1Q15F, and is positive on the 2015F outlook thanks to improving cargo demand and lower fuel prices.
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