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3 Things Investors Should Know About Jardine Cycle & Carriage Ltd’s 2017 Earnings

Jardine Cycle & Carriage Ltd (SGX: C07) is a diversified group with a strategic interest in Astra International, the largest automotive company in Indonesia. It also has stakes in Vietnam’s Vinamilk and Thailand’s Siam City Cement.

Last week, the conglomerate announced its financial results for the full year ended 31 December 2017. Let’s look at three main aspects of the announcement here.

Show me the money

Full-year revenue grew 12%, from US$15.8 billion in 2016 to US$17.7 billion in 2017, while net profit attributable to shareholders rose 16% to US$811.2 million. Earnings per share for 2017 went up 16% to US$2.05.

Underlying profit, which excludes non-trading items, climbed 16% to US$787.9 million, mainly due to Astra’s higher contributions.

In 2017, underlying profit for Astra grew 28% to US$640.7 million. The following shows the breakdown of Astra’s underlying profit:Source: Jardine Cycle & Carriage Ltd’s 2017 earnings presentation

The improved performance for Astra was mainly due to the “return to profitability at Permata Bank, while higher commodity prices benefited the trading performances of the heavy equipment and mining businesses as well as agribusiness”. The automotive business’ underlying profit, however, fell on the back of higher competition in the car market, which showed no overall growth.

Jardine Cycle & Carriage’s direct motor interests’ contribution to overall underlying profit slipped 25% to US$124.6 million while other strategic interests – consisting of 25.5%-held Siam City Cement Public Company Limited in Thailand, 23.9%-held Refrigeration Electrical Engineering Corporation and 10%-held Vinamilk in Vietnam – contributed underlying profit of US$34.3 million, a 3% increase year-on-year.

The group’s balance sheet weakened over the year. As at 31 December 2017, it had US$96.5 million in bank balances and other liquid funds, and total debt of US$1.3 billion. This translates to a net debt position of US$1.2 billion. In comparison, at the end of 2016, it had US$154.1 million in net cash. The weakening of the balance sheet was primarily due to the purchase of the Vinamilk stake, and subscription for Siam City Cement’s rights issue and additional share purchases.

Cash flow from operations for the year improved by 16.8% to US$1.6 billion. With a capital expenditure of US$744.5 million in 2017, free cash flow came in at US$910.4 million. This is down from 2016’s free cash flow of US$948.6 million.

Ka-ching!

The board has recommended a final dividend of 68 US cents per share. Together with the interim dividend of 56 US cents per share already paid out, the total dividend for 2017 would be 86 US cents per share, up 16% year-on-year.

In comparison, for 2016, the total dividend was 74 US cents per share (an interim dividend of 18 US cents and a final dividend of 56 US cents).

What the future holds?

As for its outlook, Ben Keswick, chairman of Jardine Cycle & Carriage, said:

“After a satisfactory overall result in 2017, Astra should continue to benefit in 2018 from improving economic conditions and stable commodity prices, although the competition seen in the car market is expected to intensify. The Group’s Direct Motor Interests will continue to face challenges, while its Other Strategic Interests are expected to produce growth.”

At the closing price of S$36.61 on Friday, the conglomerate was selling at around 13 times its 2017 earnings and had a dividend yield of 3.2%.

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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 Sudhan P doesn’t own shares in any companies mentioned.