PERFORMANCE
Jardine International Motors sold and delivered some 80,800 new and used motor vehicles in 1997, an increase of 25% over 1996. Turnover was US$2,345 million, a 17% increase.
Trading profit for the year ended 31st December 1997 was US$80 million, a decrease of 9% over the comparable figure for 1996. The consolidated net profit after taxation and outside interests, including exceptional items of US$6 million, was US$65 million, a decline of 5%. Excluding the exceptional items, profit declined by 14%.
Earnings per share for the year were US¢13.67 compared with US¢14.43 in 1996. Excluding the exceptional items, earnings per share were US¢12.39, a decline of 14%.
The Directors recommend a final dividend of US¢6.30 per share, which, together with the interim dividend of US¢1.20 per share, will make a total annual dividend of US¢7.50 per share, unchanged over 1996.
GROUP REVIEW
Turning to the operations, the Chairman, Anthony Nightingale, said that during the year the Group made sizeable acquisitions in the United Kingdom, furthering the strategy of building on its well-established retail business in that market to complement its activities in Asia. The Group also continues to look for new opportunities to take on premium marques in Asia where it believes that its experience and skills can be successfully exploited. In February 1998, it announced the formation of a new joint venture with companies of the Tata Group in India, which will primarily retail the new range of Tata passenger cars.
In Hong Kong, Zung Fu's deliveries of new Mercedes-Benz passenger cars increased by 15%, supported by buoyant demand, although a change in the model mix led to lower turnover and reduced margins. Some market share was also lost as overall growth was concentrated in the volume sector. New orders exceeded deliveries by a substantial margin, causing a large order book to be carried into 1998, but the outlook for new orders is now poor in view of the deteriorating economic environment. The company continued its investment in training and in other facilities such as a new main showroom on Hong Kong Island.
Market conditions in South China were markedly better in 1997, and Southern Star performed well with a strong increase in unit sales and profitability. The Group's joint venture service operations reported higher business volumes. The workshops in Southern China are part of a long-term strategy to support the Mercedes-Benz brand by offering excellent service to vehicle owners.
In Malaysia, Cycle & Carriage Bintang, in which the Group has a 13% shareholding, performed well, although it was affected towards the end of the year by the economic downturn. P.T. Tunas, the Group's Indonesian associate, was also adversely affected in the second half of the year and showed a profit decline. Both businesses have taken steps to mitigate the much more difficult market conditions that are expected to continue in 1998.
In the United Kingdom, a strong vehicle market, combined with new model launches by its principal brands, enabled Lancaster to achieve an excellent result. The acquisition of BPW enlarged the Company's exposure to the Ford franchise and to the volume sector of the market. In November, Appleyard was acquired, making the Group one of the UK's leading motor retail businesses. Despite initial operating losses in the month of December, it is expected that in due course substantial profit improvements can be achieved through rationalization and by applying Lancaster's operating methods.
In France, Cica faced a difficult year with the overall market for new cars down 20% in terms of unit sales, but this was mitigated by a significant increase in the volume of used cars sold. In the United States, Beverly Hills made a strong contribution aided by increased sales of new Mercedes-Benz models. In Hawaii, the Group has continued to expand its business through the acquisition of new franchises and a body shop but overall results have been held back by the investment in new facilities.
OUTLOOK
In conclusion, Mr. Nightingale said, "The downturn in Asia's economy will inevitably have an effect upon Jardine International Motors' results in 1998, though we remain confident about the longer term. The Group should begin to benefit from the recent acquisitions in the United Kingdom once the businesses are fully integrated."