Revenue, excluding associates and joint ventures, was some US$2,807 million, a reduction of 9% excluding the Polar Motor Group from the comparison which became a joint venture in late 1998.
Operating profit for 1999 was US$45 million, a decrease of 43% compared to 1998. The consolidated net profit for the year was US$14 million, a decrease of 64% over the comparable figure for 1998. Excluding the non-recurring items in both years, the decline was 40%.
Earnings per share declined by 64% to US¢2.95. Excluding the non-recurring items, earnings per share were US¢4.44 compared with US¢7.43 in 1998.
The Board recommends a final dividend of US¢1.80 per share, which, together with the interim dividend of US¢1.20 per share, will make a total dividend of US¢3.00 compared with US¢6.00 for 1998.
GROUP REVIEW
Turning to the operations, the Chairman, Anthony Nightingale said that the operations in Hong Kong held up well in a challenging market, and the Group is confident that current negotiations with DaimlerChrysler will lead to a continuation of a long relationship, although there will be an impact on future profitability. The United Kingdom business has suffered both from problem franchises and from the prevailing adverse market sentiment arising from the controversy over new car pricing. Elsewhere in the Group, the businesses are making good progress. While it is concentrating on resolving the problems in the United Kingdom, efforts
and resources are also being devoted to cost saving programmes, a shared services initiative in the United Kingdom, and the development of e-commerce initiatives, which are being led by the French operations.
· Hong Kong SAR and Mainland China
In Hong Kong, Zung Fu achieved an increased market share in the year and saw deliveries of Mercedes-Benz increase by 25%, significantly outperforming both the general market and the luxury sector. A strong demand for the new S-class, A-class and M-class models helped to maintain this market leading position. Reduced demand for after-sales service in the passenger car market and lower activity in the commercial vehicle sector led to a small decline in profits at Zung Fu, although revenues held steady. The company has continued to manage costs tightly, and customer interest in new models has sustained a healthy order book.
As previously advised, preliminary discussions have taken place with DaimlerChrysler with regard to their participation in the distribution of Mercedes-Benz vehicles in Hong Kong. The Group expects to arrive at a mutually satisfactory arrangement, with Zung Fu continuing to play the leading role in sales and after-sales of Mercedes-Benz vehicles in Hong Kong, in long-term partnership with DaimlerChrysler.
In Mainland China, while underlying demand remains strong, sales have been constrained by the restrictions on issuing import permits. The Group's joint venture workshops have seen a lower level of activity but further investment in these operations continued reflecting the Group's long-term confidence in the Mainland China market following WTO membership.
· Southeast Asia
Tunas Ridean, the Group's 30%-held associate in Indonesia, achieved improved car sales and a recommencement of instalment finance activities as the new car market in Indonesia began to recover.
In Malaysia, Cycle and Carriage Bintang, the Group's 13%-owned affiliate, saw a significant improvement in market conditions and produced a sharp increase in profits.
· India
Concorde Motors, the Group's 50%-held joint venture with Tata Group, incurred start up losses. Delivery volumes of the new Indica increased steadily as the year progressed reaching 9,300 units. The required production rate is now being achieved and further growth in sales will be generated by planned new products. Concorde is now building a better than expected after-sales business. The Mercedes-Benz business in Mumbai continues to operate satisfactorily.
· United Kingdom
The United Kingdom motor vehicle market deteriorated sharply in the second half of 1999 as negative news coverage regarding pricing compared to other European Union countries affected consumer sentiment. In addition to reducing new car revenues and margins in most franchises, the uncertainty has led to a significant decrease in residual values of used cars, affecting both the dealership and contract hire operations.
The group's dealerships produced results far below expectations. Despite a satisfactory performance by certain specialist franchises, substantial losses were incurred in the Rover businesses and other volume franchises.
The Polar Motor Group joint venture, which includes Dagenham Motors acquired in March 1999, made a positive contribution to Group results.
Appleyard Vehicle Contracts, a 50%-held joint venture with Barclays Bank, suffered from lower vehicle disposal profits and reduced incentive payments from manufacturers resulting in a loss for the year after goodwill amortisation.
The group has embarked on a programme of strict cost control and working capital management. In the short-term it is incurring additional significant costs in the reorganisation of its retail network, including the cost of closing underperforming operations. Combined with the poor trading results these charges, which included lease exit provisions, have produced a significant loss in 1999.
The Group expects to benefit in the long term from a consolidation of the United Kingdom motor market.
· France
The French motor car market saw sustained growth in the year, and Cica produced a healthy increase in profit. The creation of a dedicated used car brand, O'Plus, and the building of strategic relationships covering internet and auction products have positioned Cica well for future developments in the French market.
· United States
In the United States, the market for imported luxury vehicles was very strong. The Beverly Hills dealership achieved record levels of sales and market share for Mercedes-Benz passenger cars.
The Group's operations in Hawaii, where a portfolio of premium brands is represented, achieved good sales and profit growth in a rising market.
OUTLOOK
In conclusion, Mr Nightingale said, "Our principal challenge remains to restore profitability to our United Kingdom business. We will continue to focus on building sales through excellent customer service, while pursuing cost efficiencies and turnaround programmes at our underperforming dealerships which will inevitably result in further restructuring costs.
"In Hong Kong we expect satisfactory results for Zung Fu and to finalise new arrangements for our important relationship with DaimlerChrysler.
"Overall 2000 will be a challenging year for the Group, and our results will depend on a recovery in the United Kingdom business, the extent and timing of which is unpredictable."
For further information, please contact:
Jardine International Motors
Anthony Nightingale (852) 2843 8540 (office)
Sam Houston (852) 2895 7343 (office)
Matheson & Co., Ltd
Martin Henderson (44) 171 816 8135 (office)
Forrest International Limited (852) 2522 6475 (office)
Sue Gourlay (852) 2501 7936 (direct)
Ludgate Communications
Richard Hews (44) 171 253 2252 (office)
Full text of the Preliminary Announcement of Results and the Preliminary Financial Statements for the year ended 31st December 1999 can be accessed through the Internet at "http://www.irasia.com/listco/hk/jim".