Industries division comprises Swire Beverages and Swire Industrial. Swire Beverages is a Coca-Cola "anchor" bottler with the exclusive rights to manufacture, market, and distribute the products of The Coca-Cola Company in a franchise territory that includes seven provinces in Mainland China, plus Hong Kong, Taiwan, and an extensive area in the western USA. It also includes a 49% interest in the Carlsberg operations in Hong Kong, Mainland China, Singapore and Taiwan.
Swire Industrial includes sugar packaging, engineering agency and marble fabrication operations and, in addition, joint ventures with Browning Ferris Industries in waste services, Crown Cork & Seal in aluminium beverage can manufacture, ICI in paint manufacture, Groupe Schneider in busduct manufacture and Tate & Lyle in sugar production.
The industries division's contribution to Group attributable profit in 1997 amounted to HK$270 million, as compared with a contribution of HK$479 million in 1996, a decrease of 43.6%. The disappointing result arose from difficult trading conditions affecting the soft drink operations, the Crown Can Hong Kong Limited group and the Carlsberg Brewery Hong Kong Limited group.
SWIRE BEVERAGES
Swire Coca-Cola HK Limited
The company's Hong Kong operation reported lower than expected profits influenced very largely by the highest annual rainfall ever recorded in Hong Kong, most of which fell during the summer months when sales are normally at their peak. In addition, stronger competition from other beverages and an increase in imported product affected the results.
Swire Coca-Cola, USA
This division of Swire Pacific Holdings Inc. is based in Salt Lake City, Utah and serves parts of ten western states of the USA. It achieved moderate volume growth but reported lower profits due to increased price competition. During the year it commissioned a new sales centre at Reno and started work on a distribution centre at Draper, south of Salt Lake City.
Swire Coca-Cola Taiwan Limited
This operation achieved good volume growth in spite of poor weather conditions but reported lower profits, in part due to the devaluation of the Taiwan dollar and also increased costs associated with the second phase of its production facility that was completed during the year at Taoyuan.
Swire Beverages Limited - Mainland China operations
Swire Beverages made significant progress in the programme it started in 1995 to construct seven additional bottling plants in Mainland China. During the year those at Hefei and Dongguan, the fourth and fifth, were completed and commenced production. Progress was also made on the new Guangzhou plant, which will supplement existing capacity, and a replacement plant in Xiamen. Both will become fully operational in 1998.
As the new plants are completed in Mainland China, Swire Beverages' priorities are changing from providing production capacity to widening distribution through the opening of sales centres in secondary cities, and by increased expenditure on marketing activities designed to build brands and promote soft drinks consumption. Good progress was made in relation to distribution, particularly in terms of the ability to provide cold drinks to consumers, and also marketing. The overall volume grew by 28% as a result. However selling prices and profitability were generally at lower than expected levels despite progress in reducing manufacturing costs.
During 1997 Swire Beverages extended its activities beyond carbonated soft drinks into Mainland China's substantial non-carbonated soft drinks market with the opening of the Dongguan plant, and the launch of the Tian Yu Di range of juices and mineralised water, and Hi-C teas.
Swire Beverages' soft drink operations in Mainland China comprise:
Carlsberg Brewery Hong Kong Limited
The company and its subsidiaries distribute Carlsberg and other beer products in Hong Kong, Mainland China, Singapore and Taiwan. There are breweries in Hong Kong and Huizhou with a third under construction in Shanghai. Results in Hong Kong, Singapore and Taiwan were in line with 1996 but losses in Mainland China increased as the group invested in increased marketing and distribution ahead of opening the Shanghai brewery.
SWIRE INDUSTRIAL
Swire Engineering Limited
Swire Engineering Services Limited
Swire Engineering Services made good progress on the baggage handling system installation contract for the new airport at CLK and secured a three year contract to operate and maintain the system. Swire Engineering's agency operation acquired a number of new principals during the year. As a result the combined operation achieved significant profit growth.
Swire Duro Limited
Swire Duro achieved good sales and profit growth as the company's marble division made satisfactory progress on major fabrication and installation contracts.
Taikoo Sugar Limited
Taikoo Sugar's losses increased as it invested in developing its market position in Mainland China.
Crown Can Hong Kong Limited
This company operates an aluminium beverage can plant in Hong Kong and has subsidiary and associated companies which operate similar plants in Beijing, Foshan, Huizhou and Shanghai. While these operations performed creditably, the continued substantial over capacity in the Chinese aluminium beverage can industry significantly depressed results.
Crown Vinalimex Packaging Limited
The company's aluminium beverage can plant in Hanoi had a difficult first full year of operations as a result of weak demand in the Vietnam market.
ICI Swire Paints Limited
ICI Swire Paints (China) Limited
ICI Swire Paints (Shanghai) Limited
The Guangzhou operation achieved improved results but Hong Kong reported lower profits due to weaker sales demand. The construction of the second paint plant in Shanghai has experienced some delays and commercial production is now expected to start during the first half of 1998.
Swire BFI Waste Services Limited
Swire BFI Waste Services achieved good sales and profit growth as a result of increased development activity and improved results from ongoing operations. The company was awarded a 30-year landfill restoration contract in May 1997.
Schneider Swire Limited
Schneider Swire (Guangzhou) Electrical Equipment Limited
Schneider Swire had another good year, achieving further significant increases in both sales and order intake. The new Guangzhou plant commenced production on schedule in August 1997.
Tate & Lyle Swire Limited
The company, which has two sugar factories in the Guangxi Autonomous Region, reported lower losses as a result of improved cost control.
 |  |
* The soft drink sales volume is for sales in Swire Beverages' franchised territories measured in unit cases. One unit case comprises 24 eight-ounce servings.
** Net assets employed comprise shareholders' funds, minority interests and net external borrowings of Group companies, and the Group's share of shareholders' funds of associated companies.
| © Copyright 1996-2008 irasia.com Ltd. All rights reserved. |
|
DISCLAIMER: irasia.com Ltd makes no guarantee as to the accuracy or completeness of any
information provided on this website. Under no circumstances shall irasia.com Ltd be liable
for damages resulting from the use of the information provided on this website.
TRADEMARK & COPYRIGHT: All intellectual property rights subsisting in the contents of this website belong to irasia.com Ltd or have been lawfully licensed to irasia.com Ltd for use on this website. All rights under applicable laws are hereby reserved. Reproduction of this website in whole or in part without the express written permission of irasia.com Ltd is strictly prohibited. TERMS OF USE: Please read the Terms of Use governing the use of our website. |