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The Good And The Bad That Investors Should Know From Jardine Matheson Holdings Limited’s 2018 First-Half Results

Jardine Matheson Holdings Limited (SGX: J36) is a conglomerate with interest in the web of Jardines companies, which includes Jardine Strategic Holdings Limited (SGX: J37) , Jardine Cycle & Carriage Ltd (SGX: C07), Hongkong Land Holdings Limited (SGX: H78), Dairy Farm International Holdings Ltd (SGX: D01), Mandarin Oriental Limited (SGX: M04), Jardine Lloyd Thompson and Jardine Pacific.

The company recently released its 2018 first-half results. In this article, I will look at the positive and negative points from the announcement.

The positives

First of all, the company reported stronger revenue and underlying profitability for the first half of 2018. Revenue increased 14% year-on-year to US$21.3 billion while underlying earnings per share  was up by 7% year-on-year to US$2.11.

Secondly, these companies reported strong profitability: Jardine Motors, Dairy Farm, Jardine Cycle & Carriage and Mandarin Oriental. They reported that underlying profit improved by 6%, 2%, 17% and 49%, respectively, as compared to the same period last year.

Thirdly, Jardine Matheson expects the second half to be better than the first half. Here’s a comment by the company:

“After a good performance in the first half of 2018 driven primarily by Astra and Jardine Cycle & Carriage, we are optimistic for a stronger second half of the year, with these companies continuing to perform well and the contributions of other businesses expected to improve.”

Last but not the least, Jardine Matheson announced an interim dividend per share of US$0.42, up from US$0.40 last year.

The negatives

First of all, Jardine Pacific, Jardine Lloyd Thompson and Hongkong Land reported year-on-year declines in underlying profit, down by 6%, 2% and 2%, respectively.

Secondly, Dairy Farm continues to face challenges on several fronts (despite higher profitability), including increasing competitive pressures and a number of under-performing businesses within its portfolio. In order to address these issues, it has consolidated its trading operations into a more centralised structure with two main trading divisions, North Asia and Southeast Asia, in addition to Home Furnishings and Maxim’s, which remain as standalone divisions.

Thirdly, Jardine Matheson generated operating cash flow of US$1.6 billion, down from US$2.33 billion in the corresponding period last year, mainly due to negative working capital movements.

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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. Motley Fool has recommendations for Hongkong Land, Mandarin Oriental and Dairy Farm.