How Did Jardine Cycle & Carriage Ltd’s Direct Motor Interests Business Unit Fare In 2016?

Jardine Cycle & Carriage Ltd (SGX: C07) is one of the Singapore stock market’s conglomerates.

Just two weeks ago, the company had released its 2016 full year results. Given the fact that Jardine C&C is a conglomerate, I thought it would be useful for investors to take a separate look at the performance of each of the company’s businesses.

Jardine C&C segments its business into three units – Astra International, Direct Motor Interests, and Others. I have previously reviewed the Astra International business and you can find it here. In this article, I will have a quick review of the Direct Motor Interests business.

Jardine C&C has a number of directly-owned (the ownership stakes can be full or partial) businesses that deal with vehicle distribution and related services. These are housed under Direct Motor Interests. Within Direct Motor Interests, Jardine C&C further classifies the businesses by geography.

Here’s a table showing the underlying profit contributions of the Direct Motor Interests business in 2016 and 2015:

Jardine Cycle and Carriage direct motor interests profit table 2016
Source: Jardine C&C 2016 results announcement

In Vietnam, the stronger profit was due to growth in overall sales units (a 39% jump to 110,500 units). But, the Vietnam business did see a contraction in margins and an increase in operating and financing costs.

The Direct Motor Interests’ Singapore operations saw earnings grow 26% to US$49 million due to a 45% increase in passenger car sales to 12,500 units. Improved contributions from used cars and parts also helped. But, Jardine C&C’s passenger car market share in Singapore saw a slight decline from 15% to 14%.

Malaysia was home to a weaker profit performance. Despite an increase in unit sales, changes in the sales mix led to lower margins and consequently, a 28% decline in earnings.

Jardine C&C has a 44.4% stake in Indonesian vehicle distributor, Tunas Ridean. It performed well in 2016 with a 94% increase in earnings to US$18 million. Tunas Ridean had enjoyed stronger contributions from its automotive and rental operations and from its 49%-owned finance arm, Mandiri Tunas Finance. Tunas Ridean saw a 17% jump in motor car sales to 51,000 units while motorcycle sales stayed at around 206,000 units.

On the whole, all of Jardine C&C’s geographical markets for its Direct Motor Interests business reported stronger sales volume. But, some of the markets – Malaysia for example – suffered from weaker margins.

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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.