An Overview Of Jardine Cycle & Carriage Ltd’s Main Business

Jardine Cycle & Carriage Ltd (SGX: C07) is a conglomerate with a diverse set of businesses in various parts of Asia.

When I looked at the company, my first impression was that it is complex. Many investors might share the same impression.

In this article, however, I want to provide an overview of one significant part of the conglomerate’s business: The Indonesia-listed Astra International. Doing so would help us understand the bulk of Jardine Cycle & Carriage’s business, since Astra accounted for 71% of Jardine Cycle & Carriage’s 2016 underlying profit. Astra is 50% owned by Jardine Cycle & Carriage.

Getting inside Astra

Astra operates in Indonesia and itself has seven different business segments: Automotive; Financial Services; Heavy Equipment & Mining; Agribusiness; Infrastructure & Logistics; Information Technology; and Property.

Here’s what these segments are all about:

1) Automotive: The production, distribution, retail, and after-sales service of cars and motorcycles. Astra is the largest independent automotive group in Southeast Asia, and it is the sole distributor of a number of vehicle brands (such as Toyota, Daihatsu, Isuzu, Peugeot, and UD Trucks) in Indonesia. It is also the main dealer for BMW cars, and represents Honda for motorcylces.

2) Financial Services: This is where Astra provides consumer financing, heavy equipment financing, banking, and general and life insurance services.

3) Heavy Equipment & Mining: Under this segment, Astra supplies construction- and mining-related equipment, such as heavy-duty trucks, cranes, forklifts, and more. It also (a) provides after-sales service, (b) is the sole distributor of the Komatsu brand in Indonesia, and (c) is the largest coal mining services contractor in Indonesia.

4) Agribusiness: The cultivation, harvesting, and processing of palm oil.

5) Infrastructure & Logistics: This involves the development and management of toll roads; and operating water utilities and transportation services.

6) Information Technology: Astra provides solutions for document information and communication technology. It is the sole distributor of Fuji Xerox office equipment in Indonesia.

7) Property: This is where Astra develops Grade A commercial buildings. It is also has a premium apartment complex in Jakarta, Indonesia.

Understanding the profit drivers

In the chart below, you can see how much profits each of the segments above contributed to Jardine Cycle & Carriage in 2016:

Source: Jardine C&C 2016 Annual Report

There are many moving parts with Astra, given its seven business segments. Of all the segments, Automotive, Financial Services, Heavy Equipment & Mining, and Agribusiness are the most important. They accounted for 98% of Astra’s contribution to Jardine Cycle & Carriage’s profit in 2016.

If you like what you've seen, you can get even more investing insights and analyses from The Motley Fool's investing newsletter Take Stock Singapore. It's FREE, so do check it out here.

Also, like us on Facebook to follow our latest news and articles. The Motley Fool's purpose is to help the world invest, better.

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.