Jardine Matheson posts US$394m net loss for FY2020

Its revenue for the year is US$32.65b.

Jardine Matheson Holdings (JMH) reported a net loss of US$394m for the full-year 2020, driven by the weaker performances of the group’s Southeast Asian businesses in Astra and Jardine Cycle & Carriage (JC&C), as well as decreases in property valuations.

The results are a reversal from the recorded US$ 2.84b net profit in 2019.

JMH reported an underlying profit of US$2.79b for FY2020, 40% YoY lower than the previous year’s US$4.68b. Its revenue dropped 20% YoY to US$32.65b from US$40.92b in 2019.

The group’s earnings per share for FY2020 stood at 30% lower YoY to US$2.95 as well.

JMH maintains its full-year dividend at US$1.72 per share, unchanged from FY2019, “reflecting board’s confidence in long-term strength of underlying businesses and balance sheet.”

The company also mentioned that high levels of uncertainty remain this year amidst the continuing impact of the COVID-19 pandemic, with the group’s performance in the first part of 2021 expected to be affected by the continuing headwinds faced by its businesses in Southeast Asia.

“It remains too soon to predict what the impact of the pandemic will be on the group’s performance for the full year. However, we remain confident in our long-term strategy, rooted in the growth markets of Asia, and we will continue to focus on our core priorities of driving operational excellence,” JMH group managing director John Witt said.

However, JMH executive chairman Ben Keswick noted that the board sees the need to continue investing for the long-term in business opportunities which will drive future growth despite the short-term challenges of the pandemic.

“The resilience the group demonstrated in 2020 provides the board with the confidence to continue to take advantage of long-term opportunities in Asia, whilst adapting to the changing external environment and rapidly evolving expectations of our stakeholders,” Keswick said.

The group’s gearing went down to 6% at the end of December 2019. However, the group announced earlier its plans to take on additional debt in order to acquire by cash around 15% of Jardine Strategic Holdings (JSH) shares it does not already own, which will result in the increase of its gearing from 6% at the end of 2020 to 16% immediately following the completion of the acquisition.

“Taking full ownership of Jardine Strategic is consistent with our policy of investing further in the growth prospects of our existing businesses and highlights the benefits of consistently maintaining the group’s financial strength,” Keswick said of the proposed simplification.

Also Read: Jardine Matheson to restructure via US$5.5b cash acquisition

Should the simplification be approved at the special general meeting expected to happen in April 2021, JSH will be delisted and the STI Reserve stock with the highest market cap at the close two days prior to the Index deletion of JSH will join the STI.

JMH will also propose a resolution to cancel JSH’s stake via a capital reduction at JMH’s annual general meeting in 2022 should the acquisition be approved. JSH currently owns 59% stake of JMH.

Upon the announcement of the proposed acquisition earlier, CGS-CIMB has reiterated its “hold” rating of JMH.

“On a pro-forma basis, JMH guided the acquisition will result in FY2020 net profit increasing by US$83m and EPS increasing to US$3.84 from US$2.95 due to the lower share base,” analyst William Tng said.

Shares of JMH closed down 0.87% at US$65 on 12 March.