Jardine Cycle & Carriage Ltd’s Latest Earnings: What Investors Should Know

Jardine Cycle & Carriage Ltd (SGX: C07) reported its third quarter earnings yesterday. The reporting period was for 1 July 2015 to 30 September 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 such as automotive, financial services, heavy equipment and mining, agribusiness, information technology, and infrastructure, logistics and others.

You can learn more about the company here or catch up with the previous quarter’s earnings here .

Financial highlights

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

  1. Revenue for the third quarter fell 20% to US$3.7 billion on a year-on-year comparison.
  2. Consequently, profit attributable to shareholders fell by 15% to US$182 million for the third quarter of 2015.   
  3. The company’s share of associates’ and joint venture’s results (after tax) also declined from US$122.8 million in the third quarter of 2014 to US$105.1 million in the third quarter of 2015.  
  4. Jardine C&C’s earnings per share (EPS) saw a 16% decrease from US$0.5827 per share in the third quarter last year to US$0.4914 per share in the reporting quarter.
  5. Cashflow from operations for the third quarter came in at US$609.6 million with capital expenditure clocking in at US$104.6 million. This provides Jardine C&C positive free cash flow of US$505 million.  
  6. As of 30 September 2015, the group had US$1.86 billion in cash and equivalents and around US$5 billion in debt. This is an improvement from the US$1.76 billion in cash and equivalents and US$5.7 billion in debt that the company recorded on 31 December 2014.  

In short, Jardine C&C’s revenue and profit for the third quarter has continued to disappoint, following the prior two quarters. It’s notable that the firm generated strong free cash flow in the third quarter of 2015. This is important since Jardine C&C has more debt than cash currently. That said, its balance sheet has strengthened compared to the end of last year.

Operational highlights

The decline in revenue and profit at PT Astra was relatively broad based, in US dollar terms. The weakest segments in the third quarter was the financial services and the automotive segment. To add to its woes, the Indonesia Rupiah was also 12% weaker than the comparable first nine months last year. PT Astra’s profit in Rupiah fell by 14% but translated to a 25% fall in US dollar terms.  On a brighter note, the weakness in PT Astra’s revenue was offset by net income growth in its direct motor interests. Vietnam, Malaysia and Indonesia were the standout performers here.

Ben Keswick, the Chairman of Jardine C&C, summarised the quarter in a few words and gave a brief outlook for the future:

There was a lower contribution from Astra during the period as its businesses faced reduced domestic consumption, competition in the car sector, lower commodity prices and a deterioration in the credit quality of its corporate clients. This was partly compensated for by improved results in the Group’s Direct Motor Interests and contribution from the Group’s Other Interests.

The challenging trading conditions facing Astra are set to continue, and we expect the Group’s trading performance to remain little changed for the remainder of the year.

Foolish summary

At its the closing price yesterday of $33.56, Jardine C&C traded at a price-to-earnings ratio of 12.4 and has a trailing dividend yield of around 3.5%.

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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.