Jardine C&C posts 6.2% rise in Q2 underlying net profit to US$206m

REGIONAL Mercedes-Benz distributor Jardine Cycle & Carriage (Jardine C&C)'s underlying earnings survived a tough second quarter at key subsidiary Astra, largely on an improvement in corporate costs, according to financial results released on Friday.

Underlying net profit, stripped of non-trading items, rose by 6.2 per cent year-on-year to US$206 million for the three months to June 30, as revenue slipped by 2.3 per cent to US$4.44 billion.

Meanwhile, net profit surged to US$115.1 million, more than triple the US$37.7 million in the period before, largely on lower fair-value losses on agriculture produce and other investments.

The bottom line was soothed by a currency gain from the translation of foreign loans, against a loss in the year-ago period, despite an increase in overheads and net financing charges.

Jardine C&C's direct motor segment turned in US$27.4 million, lower by 39 per cent on the year before, on a steep drop in contributions from Vietnam, and losses in Malaysia and Myanmar.

Singapore - where passenger car sales rose on new launches despite higher certificates of entitlement (COE) costs - was still a pillar of strength, with 7 per cent growth to US$15.3 million.

But contributions from 50.1 per cent-owned Indonesian conglomerate Astra fell by 16.8 per cent in the quarter to US$147 million, as lower sales volumes and higher manufacturing costs took a toll on the core automotive business.

Takings were also sharply down in Astra's heavy equipment, mining, construction and energy division and agri-business, which eroded the improvement in financial services on the back of the recovery of non-performing loans, lower loan loss provisions, and a larger loan portfolio.

Meanwhile, Jardine C&C's other strategic interests were supported by growth at Vietnamese dairy producer Vinamilk, where contributions nearly doubled from US$14.2 million to US$27.8 million - making up for the slips at Siam City Cement and Refrigeration Electrical Engineering.

Earnings per share stood at US$0.29 for the quarter, up from US$0.10 before, while net asset value was US$5.94 a share, against US$5.97 as at Dec 31, 2018.

Still, the regional challenges took a toll on the group's half-year performance.

Underlying net profit for the half-year dipped by 1.4 per cent to US$407.3 million amid lower contributions from both Astra and the direct motor interests, while overall net profit more than doubled to US$427.5 million from US$173 million previously.

Turnover was 0.35 per cent lower on the year before at US$9.2 billion for the six months.

"The outlook for the rest of the year remains cautious, with Astra expected to continue to face a soft automotive market and commodity prices," said chairman Ben Keswick in a statement.

"The group's direct motor interests will also continue to be affected by challenging market conditions, while the contribution from other strategic interests is expected to be stable."

The group's Cycle & Carriage arm - which carries brands such as Citroën, Mercedes-Benz, Mitsubishi and Kia in Singapore - had said in late-July that it would drive into the car leasing business in Singapore, with a new business unit and a tie-up with ride-hailing firm Gojek.

The board has recommended an unchanged interim dividend of 18 US cents a share.

The counter shed S$0.02 or 0.06 per cent to S$33.50 on Friday before the results were released.