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

Yesterday, Jardine Cycle & Carriage Ltd  (SGX: C07) reported its 2016 fourth quarter and full year earnings.

As a quick background, the majority of Jardine C&C’s revenue comes from its 50.1%-owned Indonesian conglomerate, PT Astra. The conglomerate has a diverse set of businesses, 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 here or catch up with the results from its previous quarter here.

Financial highlights

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

  1. For 2016, Jardine C&C’s revenue was US$15.8 billion, relatively unchanged from 2015.
  2. The firm’s share of associates’ and joint ventures’ results (after tax) declined from US$471.1 million in 2015 to US$379.9 million in 2016.
  3. But, profit attributable to shareholders for 2016 was up by 2% to US$701.7 million. Underlying profit attributable to shareholders, which excludes fair value changes and one-off events, was up 7% to US$679 million.
  4. Jardine C&C’s earnings per share (EPS) was down 3% from US$1.83 in 2015 to US$1.78 in 2016. Underlying EPS was up 3% to US$1.72.
  5. For the year, cashflow from operations came in at US$1.4 billion with capital expenditure clocking in at US$467.9 million. This provided Jardine C&C with positive free cash flow of US$931.8 million, down from the US$1.384 billion seen in 2015 (US$1.848 billion in operating cash flow and US$463.7 million in capex).
  6. As of 31 December 2016, Jardine C&C had US$2.47 billion in cash and equivalents and US$5.31 billion in debt. This is an improvement from end-2015, when there was US$2.17 billion in cash and equivalents and US$5.2 billion in debt.

In all, Jardine C&C recorded flat revenue, but higher underlying profit compared to 2015. The firm also generated strong free cash flow in 2016 and improved its balance sheet from where it was in 2015.

Finally, the board of directors recommended a final dividend of US$0.56 per share, an increase from US$0.51 per share in 2015. Together with 2016’s interim dividend of US$0.18 per share, Jardine C&C will pay out US$0.74 per share in dividend for 2016. This is again an increase from the total dividend of US$0.69 per share paid out in 2015.

Operational highlights and future outlook

Most sectors under PT Astra  reported increases in profit. The strongest gain came from the agribusiness sector, which saw its profit soar by 227% to US$60.1 million. The financial services segment was the laggard though, as its bottom-line fell by 78% to US$29.7 million in 2016. Overall, PT Astra’s underlying profit contribution to Jardine C&C was US$500 million in 2016, a 6% gain from 2015.

Meanwhile, net income contributions from Jardine C&C’s direct motor interests continued to grow, increasing 18% in 2016 to US$166.7 million. Indonesia and Singapore were the standout performers, as the two markets recorded profit increases of 26% and 94% respectively. Elsewhere, Siam City Cement provided net income of US$22.3 million for 2016, an increase of 5% from the year before.

Ben Keswick, the chairman of Jardine C&C, sounded somewhat optimistic on the company’s outlook. He said:

“The outlook for 2017 appears positive as Astra should benefit from improving economic conditions in Indonesia and higher coal prices, while the Group’s Direct Motor Interests and Other Interests are expected to perform satisfactorily.”

At its closing share price of S$40.21 yesterday, Jardine C&C traded at a price-to-earnings ratio of around 16 and has a dividend yield of around 2.5%.

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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.