A Quarter To Forget For Jardine Cycle & Carriage


Conglomerate Jardine Cycle & Carriage (SGX: C07) announced third quarter earnings yesterday evening and turned in a performance that investors would likely want to forget.

The company is more than 70% owned by Jardine Strategic Holdings (SGX: J37), which is in turn majority owned by Jardine Matheson Holdings (SGX: J36).

Jardine C&C’s main business interest lies in its 50% ownership of Indonesia conglomerate Astra, with the latter accounting for more than 90% of the former’s sales and profits.

Astra is involved with a wide range of businesses which includes automobile dealerships; manufacturing, assembling, and distribution of motor vehicles; financial services related to consumer loans for vehicles; insurance; banking; mining; oil palm plantations; information technology; infrastructure and logistics; and heavy equipment engineering, among others.

Some basic numbers

During the three months ended 30 Sep 2013, the company brought in US$4.64b in revenue, representing a 13% decline compared to a year ago. Its profits suffered even more as it dropped 31% year-on-year to US$222m.

With Astra, a weaker Indonesian currency had affected its results negatively. In addition, higher labour costs, increased competition in the car market, and lower commodity prices also pressured the subsidiary’s earnings.

Operational Highlights and the balance sheet

It was really a mix of good and bad developments (with more bad than good, unfortunately) for the first nine months of 2013 compared to a year ago for Astra. Let’s run through them briefly.

The good: motorcycle and car sales had risen by 13% and 7% respectively; Astra’s financial services had financed US$4.2b, an 11% rise; Astra’s 45%-owned bank, Bank Pertama, reported a 21% rise in net income to US$130m; information technology solutions provider Astra Graphia’s net income came in 22% higher at US$13m.

The bad: Astra had lost market share in the car market from 55% to 53%; United Tractors, a heavy equipment distributor that’s 60%-owned by Astra, saw net revenue fall 15% and net income drop 24% to US$333m; the infrastructure and logistics segment’s net income declined by 28% to US$33m; in the Agri-business, represented by Astra’s 80% ownership in Astra Agro Lestari, sales dipped by 3% to US$820m while net income got slashed by 45% to US$90m with lower crude palm oil prices being a major culprit.

Jardine C&C’s financials for 2012 had been restated, and so comparisons for its balance sheet with the third quarter last year aren’t available. Nevertheless, from the start of 2012 to 30 Sep 2013, the company’s balance sheet had weakened somewhat.

Cash on hand from its non-financial services subsidiaries had declined slightly from US$1.28b to US$1.22b, while total debt had rose from US$1.39b to US$1.53b.

What’s next for Jardine Cycle and Carriage

Ben Keswick, chairman of Jardine C&C, commented that “trading conditions for the [company’s] businesses are expected to be unchanged for the remainder of the year.” With sluggish results so far, it seems that the company’s seeing the same sort of performance for the last quarter of the year.

Jardine C&C has dropped by 24% over the 12 months even as the broader market, measured by the Straits Times Index (SGX: ^STI), gained around 5%.

The company’s poor corporate results this year, where profits have already slipped 11% for the first half of 2013, would probably have contributed to the share price decline. Another big factor, however, would likely be the slowdown in economic growth in Indonesia, a country that Jardine C&C has huge exposure to through Astra.

With Jardine C&C’s business in its current state, much of its long-term value rides on the economic growth of Indonesia and that’s something investors should keep an eye on.


Shares of the company opened at S$36.69 today and are being valued at roughly 13 times trailing earnings with a dividend yield of 4% based on its pay-out last year.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chong Ser Jing doesn’t own shares in any companies mentioned.