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

Yesterday, Jardine Cycle & Carriage Ltd  (SGX: C07) reported its third-quarter earnings. The reporting period was for 1 January 2016 to 30 September 2016.

As a quick background, the majority of Jardine C&C’s revenue and profit 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 Jardine C&C in here or catch up with the results from the previous quarter here.

Financial highlights

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

  1. For the first nine months of 2016, Jardine C&C’s revenue fell 3% year-on-year to US$11.6 billion.
  2. Underlying profit attributable to shareholders for the same period fell by 4% to US$518 million.
  3. But Jardine C&C’s underlying earnings per share (EPS) saw a 10% decrease from US$1.45 per share in the first nine months of 2015 to US$1.31 per share in the first nine months of 2016. The firm’s share of associates’ and joint ventures’ results (after tax) declined slightly from US$338.3 million in the first nine months of 2015 to US$336.3 million in the corresponding period for 2016.
  4. Cash flow from operations came in at US$1.18 billion with capital expenditure clocking in at US$288.6 million. This provides Jardine C&C with positive free cash flow of US$890 million, down from the US$1.14 billion (US$1.50 billion in cash flow from operations and US$356.5 million in capex) seen a year ago.
  5. As of 30 September 2016, Jardine C&C has US$2.35 billion in cash and equivalents and around US$4.93 billion in debt. This is better compared to the US$1.87 billion in cash and equivalents and US$4.95 billion in debt that the company recorded a year ago.

In all, both Jardine C&C’s sales and profits are down year to date. It is worth noting that the firm continues to generate healthy free cash flow. Jardine C&C’s balance sheet has also strengthened compared to a year ago.

Operational highlights

For the first nine months of 2016, profit from PT Astra’s Financial Services segment and Heavy Equipment and Mining segment suffered declines of 31% and 43% year-on-year respectively. The former recorded US$78 million while the latter recorded US$71.2 million.

These were offset by better performances from the Automotive segment which saw an 14% increase in profit to US$211.6 million. Elsewhere, the Agribusiness’ profit surged almost 700% to US$34.3 million.

Overall, PT Astra profit was US$399 million for the first nine months of 2016, down 7% from a year ago.

The weakness in PT Astra’s contribution was offset by profit growth in Jardine Cycle & Carriage’s direct motor interests, which came in at 11% Indonesia and Singapore were standout performers here.

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

“The current trading conditions are likely to be little changed for the remainder of the year. Astra’s automotive businesses are expected to continue to produce improved performances, with some progress in its agribusiness and a modest recovery in its heavy equipment and mining operations, although concerns remain over the level of loan-loss provisions at Permata Bank. Steady contributions should be seen from the Group’s Direct Motor Interests and Other Interests.”

Jardine C&C’s shares closed at a price of S$42.78 on Tuesday. At that price, the conglomerate had a price-to-earnings ratio of 18.4 and sported a dividend yield of around 2.3%.

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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.