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Jardine company earnings held back by Hong Kong property

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Challenging conditions: Ben Keswick, chairman, Jardine Matheson

A number of Bermudian-listed and domiciled Jardine companies reported earnings on Friday, with strong indicators of post-pandemic recovery somewhat balanced by sizeable investment losses.

These losses were mainly due to the falling value of property in Hong Kong.

Jardine Matheson Holdings reported a 33 per cent increase in earnings per share in the first half on year. Its net profit came in at $566 million.

The company has controlling interests in a number of companies, including BSX-listed DFI Retail Group, Mandarin Oriental International and Hongkong Land Holdings.

It also indirectly controls Indonesian’s Astra, a carmaker, via Jardine Cycle & Carriage.

Revenue at Jardine Matheson was flat, and gross revenue, which includes the revenue of all associated companies and joint ventures, declined 2 per cent.

In its earnings announcement, the company said that Astra was the biggest profit contributor, at $417 million, up from $349 million in the year-earlier period. The next biggest was Hongkong Land, which brought in $224 million.

Revaluations of investment holdings knocked $482 million off of the underlying profit.

“Astra continued to deliver very good performance,” said Ben Keswick, chairman.

Mandarin Oriental International, which owns and operates hotels throughout the world, reported a net loss of $69.2 million in the six months ended June 30, compared with a net loss of $18.3 million in the year-earlier period, as a $141 million revaluation of a development site in Causeway Bay pulled down earnings.

The company is building a 25-storey tower, a mixed-use office and retail complex, on the former site of the Excelsior Hotel — Hong Kong’s fabled Lot No 1 — in a six-year, $650 million project that began in 2018.

Jardine House in Bermuda

Losses or gains are booked for adjustments in fair market value of property held as investment.

Hong Kong’s commercial property market has been hit hard by the rise in interest rates, and values have been falling.

They peaked just before the pandemic hit and have been on a downward trend ever since.

On an operating basis, results were strong. Underlying profit attributable to shareholders was $27.8 million, compared with a loss of $21.0 million in the same period a year earlier.

The company reported strength in all markets, with occupancy and revenues per available room rising.

Mandarin Oriental reported revenue for hotels under management in the first half of $882 million, up 30 per cent on year.

The company said that it plans four new openings in the second half of the year, and one reopening, of a hotel in Singapore.

“The strength of the Group’s brand, together with its existing portfolio of properties and strong pipeline, give the board confidence in the future success of Mandarin Oriental,” said Mr Keswick, who is also chairman of the hotel company.

Hongkong Land Holdings lost $333 million in the first half on a net basis, as the company recorded an investment property revaluation downward of $755 million.

“Trading conditions are likely to remain challenging in a number of key markets for the remainder of the year,” Mr Keswick, also chairman of Hongkong Land, said.

DFI Retail Group — a diversified food company known as Dairy Farm until 2021 – reported $8 million of net profit, from a $58 million net loss in the year-earlier period. Revenue was flat.

A number of Jardine companies redomiciled to Bermuda ahead of the return of Hong Kong to administration by the Chinese government. They later listed in London and are primarily managed from Hong Kong.

Assets of Jardine companies are historically concentrated in Hong Kong, though most of the companies are increasingly diversified geographically.

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Published July 31, 2023 at 8:00 am (Updated August 01, 2023 at 8:11 am)

Jardine company earnings held back by Hong Kong property

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