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JARDINE Cycle & Carriage (Jardine C&C), which built its fortunes largely on Mercedes-Benz cars, owes its creditable performance last year to a somewhat less glamorous commodity: palm oil.
Thanks to a 69 per cent price rise - it averaged US$775 a tonne last year - palm oil became a star contributor to Astra International, Jardine C&C's 50.1 per cent owned Indonesian subsidiary and the group's main profit generator.
Even though Astra's palm oil output was flat at 921,000 tonnes, the record prices helped reap US$86 million (S$120 million) in profits for the group. That was Jardine C&C's single biggest profit churner.
The group posted an 82 per cent rise in its full-year net profit to US$374 million (S$523 million) - reversing drops in the previous two years. Revenue was up 24 per cent to US$8.9 billion.
Earnings per share hit 108.28 US cents, from a restated 60.53 US cents in 2006, while net asset value per share stood at US$6.18, up from US$5.56.
Besides palm oil prices, Astra benefited from a recovery in the Indonesian vehicle market, posting a net profit of US$711 million, up 75 per cent.
At home, Jardine C&C's motor interests - Mercedes, Mitsubishi, Kia and Citroen - posted a profit of US$32.8 million, up 11 per cent from 2006.
While the Malaysian car business improved, it contributed only US$2.3 million. The group will be restructuring this sector by disposing of all franchises except Mercedes.
In the light of what chairman Anthony Nightingale called 'an excellent increase in earnings', Jardine C&C is recommending a final dividend of 32 US cents a share. Together with the interim payout, shareholders will be getting 43 US cents per share, versus 20 US cents in 2006.
The group's consolidated net debt, excluding borrowings within Astra's financial service operations, was US$235 million at the end of last year - US$501 million lower than at end-2006.
Debt from financial services, which include vehicle loans, stood at US$1,254 million - US$249 million lower.
Cash and equivalents at the end of the year stood at US$672.1 million, up from US$551.9 million at the beginning of that year.
With palm oil prices continuing to rise - hovering at around US$1,000 a tonne now - directors said the group is looking for new land on which to plant palm.
Mr Nightingale said the group 'has entered 2008 with most of its businesses performing well', but warned that an economic downturn could 'adversely affect' markets that it operates in.
christan@sph.com.sg
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