The Good And The Bad: What Investors Should Know About Jardine Cycle & Carriage Ltd’s Latest 2016 Results

Jardine Cycle & Carriage Ltd (SGX: C07) is one of the companies in Singapore’s stock market that are under the giant umbrella of the Jardine group of companies. Some of the other members of the Jardine family include Jardine Strategic Holdings Limited (SGX: J37), Mandarin Oriental Limited (SGX: M04), and Jardine Matheson Holdings Limited (SGX: J36).

On its own, Jardine C&C can be considered to be a conglomerate with a diverse set of businesses. That’s because the bulk of its revenue and profit comes from its 50% stake in Indonesian company Astra, which has many business segments such as automotive, financial services, heavy equipment and mining, agribusiness, and more.

Jardine C&C recently reported its 2016 full year results. There are both positive and negative takeaways from the company’s latest earnings that investors may want to learn about. Let’s take a look, starting with an overview of the numbers.

1. The overall numbers

The following’s a table showing some important items from Jardine Cycle & Carriage’s income statement for 2016 and 2015:

Jardine C&C income statement table
Source: Jardine Cycle & Carriage 2016 full year earnings release

We can see that Jardine C&C delivered a positive business performance in 2016, on the whole. It managed to grow its revenue, underlying profit attributable to shareholders (which strips off one-time events), and dividend per share.

2. The positives

There are a number of positives from Jardine C&C’s latest 2016 performance.

To begin with, the company delivered 7% growth in underlying profit attributable to shareholders, as mentioned earlier. What’s more, this 7% growth figure includes Jardine C&C’s share of losses incurred at Astra’s 44.6%-owned joint venture, Permata Bank; the bank had suffered significant loan-loss provisions in its commercial loan book.

If the Permata numbers were excluded, Jardine C&C’s underlying profit in 2016 would have been US$791 million, up 25% from 2015.

Secondly, both Astra and Jardine C&C’s direct motor interests reported stronger net profits in 2016. Underlying profit at the former was up 6% in 2016 while the latter’s net profit grew 18%.

Lastly, Jardine C&C ended 2016 with a stronger balance sheet than at end-2015. The company had US$2.47 billion in cash and equivalents and US$5.31 billion in debt as of 31 December 2016; back then at the end of 2015, the company had US$2.17 billion in cash and equivalents and US$5.2 billion in debt.

3. The negatives

The biggest laggard for Jardine C&C in 2016 would be the Financial Services business of Astra; net income there declined by 78% to US$59 million due to the aforementioned weakness at Permata Bank.

But if the Permata Bank numbers were excluded, the Financial Services sector would have seen its net income rise 7% to US$282 million.

In all, it was a good year for Jardine C&C with most of Astra’s business segments delivering a better performance. Looking ahead, the company has a positive outlook for 2017.

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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 Lawrence Nga doesn’t own shares in any companies mentioned.