Yesterday evening, Jardine Matheson Holdings Limited (SGX: J36) reported its earnings for 2015. As a brief background, the company’s one of the largest in Singapore’s stock market with a market capitalisation of US$18.3 billion. It is a conglomerate and has many subsidiaries that include other Singapore-listed companies. The firm’s portfolio has: the private companies Jardine Pacific and Jardine Motors Group; the London-listed Jardine Lloyd Thompson Group; the Singapore-listed bunch of Jardine Strategic Holdings Limited (SGX: J37), Hongkong Land Holdings Limited (SGX: H78), Dairy Farm International Holdings Ltd (SGX: D01), Mandarin Oriental International Limited (SGX: M04), and Jardine Cycle & Carriage Ltd…
Yesterday evening, Jardine Matheson Holdings Limited (SGX: J36) reported its earnings for 2015.
As a brief background, the company’s one of the largest in Singapore’s stock market with a market capitalisation of US$18.3 billion. It is a conglomerate and has many subsidiaries that include other Singapore-listed companies. The firm’s portfolio has:
- the private companies Jardine Pacific and Jardine Motors Group;
- the London-listed Jardine Lloyd Thompson Group;
- the Singapore-listed bunch of Jardine Strategic Holdings Limited (SGX: J37), Hongkong Land Holdings Limited (SGX: H78), Dairy Farm International Holdings Ltd (SGX: D01), Mandarin Oriental International Limited (SGX: M04), and Jardine Cycle & Carriage Ltd (SGX: C07);
- and the Indonesia-listed Astra International.
These companies in Jardine Matheson’s portfolio provide services in a wide range of areas, including engineering and construction, insurance broking, property investment and development, retailing, luxury hotels, and automotive-related activities among others.
With that, let’s dig into Jardine Matheson’s earnings to find out how it did. Here are some important financial-related takeaways:
- Revenue for the year was US$37.0 billion, down 7.3% from US$39.9 billion in 2014.
- But, total profit attributable to shareholders climbed by 5% from US$1.71 billion in 2014 to US$1.80 billion. If non-trading items (such as revaluation gains) were excluded, Jardine Matheson’s underlying profit attributable to shareholders would have decreased by 11.1% instead from US$1.53 billion in 2014 to US$1.36 billion.
- Consequently, the company’s earnings per share had stepped up by 4.3% in 2015 to US$4.82. The underlying earnings per share, however, had fallen by 11.8% to US$3.65 from a year ago.
- Jardine Matheson ended 2015 with a net asset value per share of US$53.47, up 3% from US$51.79 a year ago.
- Moving on to the cash flow picture, Jardine Matheson reported a positive free cash flow of US$3.03 billion on the back of US$4.12 billion in cash flow from operations and US$1.09 billion in capital expenditure (purchase of tangible assets). This was an improvement from the prior year when free cash flow came in at US$2.2 billion (US$3.35 billion in cash flow from operations and US$1.16 billion in capex).
- The conglomerate ended 2015 with US$10.98 billion in debt and US$4.78 billion in cash. This is largely unchanged from a year ago when it had US$11.48 billion in debt and US$5.32 billion in cash.
- Lastly, Jardine Matheson maintained its dividend payout for 2015 at US$1.45 per share, the same level as 2014. This breaks a streak of 13 consecutive years of dividend growth which saw the company’s dividend climb from US$0.265 per share in 2001.
To sum it up, despite the drop in earnings, Jardine Matheson had managed to maintain the strength of its balance sheet and had also generated stronger cash flows.
Let’s now touch on two of the biggest contributors to Jardine Matheson’s revenue in 2015: Dairy Farm (at 30%) and Astra (at 37%).
Dairy farm had experienced a soft trading environment in Singapore, Malaysia, and Indonesia while North Asia was stable. The soft trading environment had led to a drop in earnings for the pan-Asian retailer in 2015.
As for Astra, the Indonesia conglomerate had faced reduced domestic consumption, competition in its automotive sector, weaker commodity prices, and a deterioration in corporate credit quality. This resulted in lower earnings at all of Astra’s business segments other than heavy equipment and mining.
On the outlook for Jardine Matheson, Chairman Sir Henry Keswick had the following comments in the earnings release:
“While the current economic conditions in China and Indonesia are expected to continue to affect the Group’s profitability in 2016, we remain positive about the medium-term prospects for our companies. They all possess sound finances, have clear strategic objectives and are well positioned to benefit from the increasing spread of affluence in the region.”
When everything’s pieced together, it seems like Jardine Matheson is chugging forward at a slow but steady pace with management confident about its future prospects.
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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 Esjay owns shares in Dairy Farm International Holdings.