The Good And Bad That Investors Should Know From Jardine Cycle & Carriage Ltd’s Latest Earnings

Jardine Cycle & Carriage Ltd  (SGX: C07) is a bona fide conglomerate. In 2017, 81% of the company’s underlying profit came from the Indonesia-listed 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.

In early March, Jardine Cycle & Carriage reported its 2017 full year earnings update. There are both positive and negative takeaways that investors may want to learn about.

The positives

Firstly, the conglomerate delivered healthy revenue and underlying profit growth in 2017. For the year, Jardine Cycle & Carriage’s revenue increased by 12% to US$17.70 billion, while its underlying earnings per share (EPS) was up by 16% to US$1.99.

Secondly, the operating margin improved from 9.5% in 2016 to 10.0% in 2017.

Thirdly, Jardine Cycle & Carriage generated operating cash flow of US$1.7 billion in 2017, up from US$1.4 billion in 2016.

Last but not least, the company recommended a final dividend of US$0.68 per share, bringing its total dividend for 2017 up to US$0.86 per share. This is 16% higher than 2016’s dividend of US$0.74 per share.

The negatives

Firstly, Jardine Cycle & Carriage’s Direct Motor Interests segment had a challenging year in 2017, with its underlying profit down by 25% to US$125 million. All countries, with the exception of Singapore, reported declines in underlying profit. Furthermore, the conglomerate expects the challenges in this segment to remain in 2018.

Secondly, the company’s net debt had increased from US$2.8 billion at end-2016 to US$4.2 billion as of 31 December 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.