Jardine C&C profit declines for 2nd year in a row

DIVERSIFIED Jardine Cycle & Carriage (Jardine C&C) posted a 21 per cent drop in net earnings to US$223.8 million (S$342.3 million) for the year ended Dec 31.

It was its second straight annual drop in earnings since 2004, when it reaped a record profit of US$349.4 million.

Revenue almost doubled to US$7.19 billion, following the full consolidation of Indonesia-based Astra International, which has become a subsidiary.

Cost of sales rose 87 per cent to US$5.73 billion. Tax expenses more than doubled to US$174.2 million.

As a result, earnings per share sank to 66.02 US cents from 84.06 US cents previously. Net asset value per share however stood at US$5.56 from US$4.59 on a healthier balance sheet with net assets at US$4.06 billion, from US$3.53 billion previously.

Cash and equivalents at the beginning of the year was US$491 million, compared with US$177 million previously. At Dec 31, they were US$551.9 million, against US$491 million.

Group net debt shrank by 19 per cent to US$2.1 billion, on lower demand for consumer loans in Indonesia. Excluding consumer finance, debt dipped 1 per cent to US$600 million.

While its Singapore motoring business fared well on better Mercedes and Mitsubishi sales, it was not enough to offset the far larger Indonesian operation.

Consumer confidence there has yet to recover from the increase in interest rates and removal of fuel subsidies two years ago.

With the damaging floods in recent months, Astra's first-quarter performance in the current financial year will suffer. For the year ended Dec 31, Astra posted a 32 per cent drop in net profit to 3.71 trillion rupiah (S$619.6 million).

Jardine C&C group managing director (MD) Adam Keswick said that while motoring will remain a major business, the group will endeavour to be 'less reliant' on it by growing Astra's other operations. These include plantations and infrastructure.

He remains as hopeful as last year that Indonesia will turn around. He added that the group has no intention of lifting its stake in Astra of just above 50 per cent.

Mr Keswick will take up a new position at Jardine Pacific. His cousin Benjamin Keswick will take over as Jardine C&C group MD in April. Meanwhile, group finance director Neville Venter has retired. His post is being filled by the former finance director of Jardine Schindler, Mr SC Chiew.

Despite the profit shrinkage, Jardine C&C is paying a final dividend of 17 US cents per share.

The group is bracing itself for keener competition. Yamaha, for instance, is giving Astra's Honda a run for its money in the motorbike market. And Nissan, which recently launched a domestic model, could erode Astra's dominant position with Toyota.

In Singapore, the car market could shrink this year on a small supply of certificates of entitlement.

christan@sph.com.sg