The marine services division comprises two subsidiary companies, Swire Pacific Offshore Holdings Limited which owns and operates a fleet of offshore support vessels, and Swire Pacific Ship Management Limited which provides marine personnel primarily to Swire Group companies. The division also has interests in associated companies engaged in ship repairing and harbour towage services in Hong Kong and in container terminal operations in Hong Kong and Mainland China.
The marine services division's contribution to Group attributable profit in 1997 amounted to HK$450 million, as compared with a contribution of HK$387 million in 1996, an increase of 16.3%. Strong profit growth in Swire Pacific Offshore more than compensated for the decline in Modern Terminals which reported results for the calendar year in 1997 as compared to a 15 month period in 1996.
Swire Pacific Offshore Holdings Limited
In 1997 demand for oil rigs and offshore support vessels continued the improvement seen in 1996 with higher levels of oil exploration and a shortage of support vessels. As a consequence, vessel utilisation and charter rates have risen, leading to a substantial increase in operating profits, which were further enhanced by the sale during the year of a vessel that no longer met the company's fleet profile.
During the year, the company exercised options to build a further two 12,000 BHP anchor handling tug supply vessels to add to the four ordered in 1996. Three of the six vessels ordered were delivered during the year and were operated principally in the North Sea. The remaining three vessels are scheduled for delivery during 1998.
Swire Pacific Ship Management Limited
This company continued to provide marine personnel, mainly to Swire Group companies.
Hongkong United Dockyards Limited
The international ship repair market remained depressed during 1997 and as a result the company's operation has been reduced to only one dock with consequent savings in operating expenses. This change is expected to show an improvement in the results in 1998, although the outlook for the industry generally remains dull. Land engineering activities grew during the year and the company continued to maintain a steady stream of income from the rental of land for container operations.
The Hongkong Salvage & Towage Company Limited
Ocean vessel activity in Hong Kong appears to have reached a plateau, and harbour tug movement growth will be limited. However the company maintained its profitability by increasing the level of income from overseas and from operations outside Hong Kong harbour. The year saw an introduction into service of two new vessels for the transfer of containerised waste from the Island West Transfer Station to the Western New Territories landfill. Two new tugs suitable for sea going work were delivered in early 1998.
Modern Terminals Limited
Growth in container throughput in Hong Kong slowed further in 1997 and as a result the company's profitability fell compared to the equivalent period reported in the previous year's results. The company has sought to increase efficiency and reduce costs, including the retrenchment of staff. Additional container throughput has been secured which will increase utilisation.
Shekou Container Terminals Limited
Container throughput increased considerably during the year to over 200,000 TEU with the introduction of additional liner services making regular calls at the terminal.
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