Jardine C&C's Q1 earnings drop 36% to US$135m on fair-value investment loss

FAIR-VALUE losses claimed their pound of flesh in first-quarter earnings at Jardine Cycle & Carriage (Jardine C&C), the company said on Thursday.

Net profit sank to US$135.4 million for the three months to March 31 - a 36 per cent plunge against the same period the previous year - despite a 12 per cent rise in revenue to US$4.64 billion.

The group chalked the decline up to the recognition of fair-value changes in its equity instrument investments, on the adoption of the new IFRS 9 accounting standards. Such changes were previously classified as available-for-sale and recorded as other comprehensive income, rather than profit and loss.

Otherwise, underlying profit attributable to shareholders was US$219 million, or a year-on-year increase of 8 per cent, according to Jardine C&C.

Contributions from Indonesian subsidiary Astra - which make up the lion's share of earnings, at US$365 million - were down by 4 per cent on poorer showings from automotive, financial services and agribusiness operations.

The decline came in spite of an increase in net income from the group's heavy equipment, mining, construction and energy division, which saw gains in coal production and sales amid higher prices.

Meanwhile, Jardine C&C's direct motor interests saw an improvement of 23 per cent to US$28 million. The Singapore, Indonesia and Vietnam markets fared better, with Malaysia's Cycle & Carriage Bintang posting a loss on higher operating and financing costs.

As for its other strategic interests, Jardine C&C reaped a dividend income of US$9 million in the quarter from its 10 per cent stake in Vietnamese dairy producer Vinamilk.

It did not recognise any contribution from its 25.54 per cent interest in Siam City Cement Public Company in Thailand and its 24.65 per cent holding in Vietnam's Refrigeration Electrical Engineering Corporation.

These companies have not yet reported their first-quarter results and will be accounted for in the second quarter.

"Together, these results are not expected to have a material impact on the group," Jardine C&C added.

Earnings per share was 34 US cents, down from 54 US cents the year before.

No dividend was declared for the quarter.

Chairman Ben Keswick said in a statement: "Astra is continuing to benefit from stable coal prices, although the car market is increasingly competitive. While the group's direct motor interests are also likely to continue to face challenges, its other strategic interests are expected to produce growth."

He added that Jardine C&C's full-year outlook "is for a satisfactory performance" on the whole.

Jardine C&C closed up by S$0.31, or 0.91 per cent, to S$34.31, before the announcement.