Jardine Cycle & Carriage Ltd’s Latest Earnings

Jardine Cycle & Carriage Ltd  (SGX: C07) reported its earnings for the quarter and year ended 31 December 2015 yesterday.

As a brief background for context later, 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 the results from its previous quarter here.

Financial highlights

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

  1. For 2015, revenue fell 16% to US$15.7 billion.
  2. The firm’s share of associates’ and joint ventures’ results (after tax) also declined by 18% from US$576 million in 2014 to US$471 million in 2015.
  3. With lower revenue and lower contribution from associates and joint ventures, Jardine C&C’s profit attributable to shareholders for 2015 also fell by 16% to US$688 million.
  4. Jardine C&C’s earnings per share (EPS) fell by 19% from US$2.24 in 2014 to US$1.82 in 2015. A larger share count had resulted in the bigger fall in the company’s per share earnings
  5. On a brighter note, the company’s free cash flow for 2015 came in at US$1.41 billion (US$1.88 billion in cash flow from operations and US$464 million in capex), more than double 2014’s free cash flow of US$586 million (US$1.24 billion in cash flow from operations and US$654 million in capex).
  6. As of 31 December 2015, Jardine Cycle & Carriage had US$2.17 billion in cash and equivalents and US$5.15 billion in debt. This is an improvement from the US$1.77 billion in cash and equivalents and US$5.7 billion in debt that the company recorded exactly a year ago.

In all, Jardine C&C’s revenue and profit both fell by double digits. That said, it’s notable that the firm generated strong – and growing – free cash flow in 2015 and had strengthened its balance sheet as well.

Last July, the conglomerate raised around US$752 million from a rights issue mainly to finance its purchase of a 24.9% stake in Thailand-listed Siam City Cement Public Company as well as other corporate purposes. The rights issue was mainly what caused Jardine C&C’s share count to rise. Siam City Cement is Thailand’s second largest cement manufacturer.

Finally, the board of directors had recommended a final dividend of US$0.51 per share. Coupled with the interim dividend of US$0.18 per share, Jardine C&C will pay out US$0.69 per share in dividends for 2015. This is a decline from the US$0.85 per share paid out the year before.

Operational highlights

The decline in revenue and profit at PT Astra was relatively broad based. The weakest segment in 2015 was the agribusiness sector which saw profits get sliced by 75%. PT Astra had not only faced challenging trading conditions in 2015, it also suffered from unfavourable currency swings as the rupiah and U.S. dollar exchange rate was on average 12% weaker in 2015 as compared to 2014.

All told, PT Astra’s revenue declined by 24% in U.S. dollar terms. The net profit from PT Astra that is attributable to Jardine C&C’s shareholders had fallen by 35% to US$486.2 million.

On a brighter note, the weakness in PT Astra was offset by a strong 123% net income growth (to US$183.6 million) in Jardine C&C’s direct motor interests. Vietnam and Malaysia were the standout performers here. Elsewhere, Siam City Cement provided net income of US$21.3 million for 2015.

Ben Keswick, the chairman of Jardine C&C, continued to sound a cautious note on the company’s outlook. He said in the earnings release:

“The Group remains cautious about the outlook for 2016 given the uncertain external macroeconomic environment in the region, although Astra’s strong cash generation and sound balance sheet are enabling it to invest for the future and to benefit from any improvement in trading conditions. The Group’s Direct Motor Interests will face continuing pressure on margins, while earnings from Other Interests will include a full-year’s contribution from its investment in Siam City Cement.”

Foolish summary

At its closing share price yesterday of S$36.60, Jardine C&C traded at a price-to-earnings ratio of around 14 and has a trailing yield of 2.6%.

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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.