Jardine Cycle & Carriage Ltd’s Latest Earnings: Revenue and Profit Falls (Again)

Jardine Cycle & Carriage Ltd  (SGX: C07) reported its first-half earnings for its fiscal year ending on 31 December 2015 on Friday evening. The reporting period was for 1 January 2015 to 30 June 2015.

The majority of Jardine C&C’s revenue comes from its 50.1%-owned Indonesian conglomerate, PT Astra. The conglomerate has a diverse business, with segments like automotive, financial services, heavy equipment and mining, agribusiness, information technology, and infrastructure, logistics and others.

You can learn more about Jardine C&C in here or catch up with its previous quarter’s earnings here.

Financial highlights

The following’s a quick take on Jardine C&C’s financial figures:

  1. Revenue for the first six months of 2015 fell 13% year over year to US$8.2 billion. This decline follows a similar 14% fall in revenue in the first-quarter of 2015.
  2. Consequently, profit attributable to shareholders also fell by 16% to US$362 million for the first-half of 2015.
  3. Jardine C&C’s Earnings per share (EPS) followed suit with a 16% decrease from US$1.18 in the first-half last year to US$0.99 in the reporting period.
  4. The company’s share of associates’ and joint venture’s results after tax also declined from US$164.8 million in the first-half of 2014 to US$121.9 million in the first-half of 2015.
  5. On a positive note, cash flow from operations for the first six months of 2015 came in at US$914.7 million with capital expenditures clocking in at just $251.9 million. This gave Jardine C&C a healthy free cash flow of US$662.8 million, up significantly from the figure of US$260.1 million seen a year ago (US$620.7 million in operating cash flow and US$360.6 million in capital expenditures).
  6. As of 30 June 2015, Jardine C&C had US$1.58 billion in cash and equivalents and US$5.9 billion in debt.

In short, Jardine C&C’s revenue and profit for the first-half of 2015 has continued to disappoint.

However, it’s notable that the firm is free cash flow positive for the reporting period. This is important, since Jardine C&C currently has more debt than cash.

In June, the conglomerate also raised around US$749 million from a rights issue mainly to finance its purchase of a 24.9% stake in Siam City Cement Public Company. Of the US$749 million raised, US$616 million has been used to repay borrowings which were used to fund the purchase. Jardine C&C will provide periodic updates for the remaining $123 million that was raised.

Finally, Jardine C&C’s board of directors had recommended an interim dividend of US$0.18 cents per share. This was unchanged from the same period the year before.

Operational highlights

The decline in revenue and profit at PT Astra was relatively broad based in US dollar terms. The weakest areas in the reporting period were the automotive and the agribusiness segments.

In particular, the automotive segment for PT Astra had suffered due to a general slowdown in the economy. Jardine C&C’s management team commented that the overall wholesale market for cars in Indonesia fell 18% to 525,000 units. In turn, PT Astra saw a 21% decline in its own car sales to 263,000 units. Currently, PT Astra maintains a 50% market share.

To add to Jardine C&C’s woes, the rupiah was also 10% weaker than the first-half of 2015. This turned a 13% decline in rupiah-based profit at PT Astra for the first-half of 2015 into a 23% fall in US dollar terms.

On a brighter note, the weakness in PT Astra’s revenue was offset by net income growth in Jardine C&C’s direct motor interests. Vietnam, Singapore, and Malaysia were standout performers.

All told, Ben Keswick, the Chairman of Jardine C&C, sounded a cautious note on the company’s outlook but remained confident in the financial strength of his business. He said:

“Astra’s earnings in the half year were lower in the face of reduced domestic consumption, intense competition in the car sector and lower commodity prices in Indonesia, and its contribution to the Group was reduced further by a weaker rupiah exchange rate. While the timing of a recovery is uncertain, our businesses are well-positioned once momentum is regained, and remain soundly underpinned by the strength of our balance sheets.”

Foolish summary

As of its closing price of S$29.55 on Friday, Jardine C&C traded at a price-to-earnings ratio of 10 and had a trailing dividend yield of around 2.9%.

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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 Chin Hui Leong doesn’t own shares in any companies mentioned.