Jardine Cycle & Carriage Ltd’s Latest Earnings: How Did The Astra Business Perform?

Calling Jardine Cycle & Carriage Ltd  (SGX: C07) a conglomerate would be fitting, given that the company has three segments, namely, Astra, Direct Motor Interests, and Other Strategic Interests.

In early March, Jardine Cycle & Carriage reported its 2017 full year earnings update. Given that the company has three different businesses, I thought it would be useful to have a look at the performance of the individual segments.

In this article, I will be running through the Astra segment.

What Astra does

The Astra segment involves Jardine Cycle & Carriage’s 50% stake in the Indonesia-listed company, Astra. The company, which also operates mainly in Indonesia, is a conglomerate in itself, given that it has seven different business segments: Automotive; Financial Services; Heavy Equipment & Mining; Agribusiness; Infrastructure & Logistics; Information Technology; and Property.

In 2017, Astra accounted for 81% of Jardine Cycle & Carriage’s underlying profit of US$787.9 million.

The financial performance

The table below shows a condensed income statement for the Astra segment for 2017:

Source: Jardine Cycle & Carriage 2017 full year earnings presentation

There are a few important points to note. Firstly, all of Astra’s segments, with the exception of the Automotive and Infrastructure and Logistics segments, had enjoyed a good year in 2017, given their underlying profit growth.

Secondly, the Automotive segment saw its profit decline. Growth in earnings from the components business had been more than offset by lower car sales and discounting as a result of competition.

Thirdly, the Financial Services segment experienced profit growth due to improved performance at its various financial institutions, such as Permata Bank, Astra Sedaya Finance, Federal International Finance, and Asuransi Astra Buana.

Lastly, the Heavy Equipment, Mining, Construction, and Energy segment experienced growth across the board. In particular, strong coal prices led to an improvement in the segment’s construction machinery and mining contracting businesses, as well as its mining operations.

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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.