Jardine C&C's underlying profit falls 66% in H1; interim dividend halved

Singapore

WITH a slump in car sales amid the Covid-19 pandemic, Jardine Cycle & Carriage (Jardine C&C) saw a steep 66 per cent drop in its underlying profit to US$138 million for H1 FY2020 ended June.

Besides the challenges in the automotive segment, the company was also hit by weakness in the financial services and heavy equipment and mining businesses.

Jardine C&C's underlying earnings per share, which excludes non-trading items like investments, stands at 35 US cents, down from 103 US cents a year ago.

The mainboard-listed company declared an interim dividend of 9 US cents per share, half that of a year ago. The interim dividend will be paid on Oct 2.

Its revenue for H1 fell 28 per cent to US$6.59 billion, hit by the weaker performance of its automotive group Astra. Indonesia's Covid-19 containment measures resulted in the temporary closure of Astra's automotive manufacturing and distribution operations. Net income from Astra's automotive business fell by 79 per cent to US$48 million for the period.

Astra also saw a significant rise in the number of restructured loans. This led to net income for its financial services segment falling 25 per cent to US$142 million, due to increased loan loss provisions.

Its general insurance company, Asuransi Astra Buana, also reported a 4 per cent decrease in net income to US$35 million, caused by lower underwriting income.

Meanwhile, weaker coal prices weighed on Astra's heavy equipment, mining, construction and energy division, where net income fell by 29 per cent to US$160 million.

Nevertheless, Astra remained in the black with a profit of US$372 million, excluding the disposal of its investment in Permata Bank. This is 44 per cent lower than its profit a year ago.

Jardine C&C's direct motor interests however fell into the red, with a loss of US$300,000, compared to a profit of US$33 million in the same period last year.

Contribution from Cycle & Carriage Singapore plunged 95 per cent to US$1 million, as passenger car sales decreased by 61 per cent to 3,200 units. Cycle & Carriage Bintang contributed a loss of US$3 million, as unit sales fell by 46 per cent.

Contributions from Jardine C&C's strategic interests in Vietnamese automotive firm Thaco were also substantially lower as automotive operations were suspended in Q2.

Jardine C&C also received lower contributions from its investment in Vinamilk, due to the timing of the declaration of its interim dividend. The dividend will be recognised by Jardine C&C in the second half of this year; in FY2019, it was declared and recognised in the first half.

One bright spot is that the company's consolidated net debt, excluding Astra's financial-services subsidiaries, was lower at US$1.3 billion as at end-June, compared to US$3.0 billion at the end of 2019. This was mainly due to proceeds from the disposal of Astra's investment in Permata Bank, which resulted in a US$188 million gain.

Ben Keswick, Jardine C&C's chairman, acknowledged that the company's results were " significantly impacted" by the Covid-19 outbreak, and expects the pandemic to continue to hit performance for at least the rest of this year.

"The group has been focused on reducing operational and capital expenditure, managing working capital and ensuring liquidity. The board remains confident that the group's strong financial position and clear strategic priorities will position it well to deliver long-term growth," he said.

Jardine C&C shares closed unchanged at S$20 on Thursday, before the results were announced.