Jardine Strategic full-year profit down 57% to US$1.84b

JARDINE Strategic Holdings' (JSH) full-year profit sank 57 per cent to US$1.84 billion, hit by the costs of restructuring Dairy Farm's South-east Asia food business and fair-value investment losses.

The lower profits came on the back of the group's US$352 million share of a restructuring charge in respect of Dairy Farm's South-east Asia food business. 

JSH said a strategic review had concluded that Dairy Farm's South-east Asia food business was "not viable in its current form". Costs were thus incurred as it exited from various underperforming stores and cleared stock.

Also weighing on profits was a net loss of US$377 million due to unrealised fair-value losses related to non-current investments. 

But excluding those factors, underlying profit attributable to JSH shareholders was US$1.78 billion, up 14 per cent.

The board is proposing a final dividend of 24 US cents per share. This gives a full-year dividend of 34 US cents, up from 32 US cents before. 

Revenue for the period ended Dec 31 gained 11 per cent to US$34.09 billion.

Meanwhile, gross revenue - including turnover from associates, joint ventures and Jardine Matheson Holdings (JMH) - grew by 11 per cent to US$92.35 billion.

JMH holds a 84 per cent stake in JSH, while JSH has a 58 per cent interest in JMH.

Full-year net profit at JMH slid 56 per cent to US$1.73 billion. 

The lower profits were largely due to JMH's US$296 million share of the restructuring charge from Dairy Farm's South-east Asia food business. Profits also suffered from a net loss of US$316 million due to unrealised fair-value losses related to non-current investments.

Excluding those factors, underlying profit attributable to JMH shareholders was US$1.7 billion, up 10 per cent from the previous year. 

Chairman Ben Keswick said: "We expect the group to face more challenging conditions in 2019 due to economic uncertainties affecting consumer sentiment and commodity prices."

But he also noted the sale of the group's interest in Jardine Lloyd Thompson to Marsh & McLennan Companies, which is expected to be completed in Spring 2019. The sale will fetch some US$2 billion, which he said will "further enhance the group's ability to take advantage of opportunities in its core markets across Asia".

Mr Keswick added: "The group continues to invest for growth and to pursue its strategy of building significant stakes in strong companies that are benefiting from the opportunities offered by the economic development of the region and the growth of the middle classes."

JMH's board is recommending a final dividend of US$1.28 per share. This would take the full-year's payout to US$1.70 per share, up from US$1.60 before. 

JSH closed at US$39.50, down 1.86 per cent or US$0.75, before the announcement, while JMH finished lower by US$2.67 or 3.75 per cent at US$68.56.