RESULTS
The Board of Directors announced today an
unaudited consolidated net profit after taxation and minority
interests for the six months ended 30 June 1996 of S$96.0 million,
an increase of 14% over the results for the six months to 30 June
1995.
Earnings per share for the half year were
41.1 cts compared with 36.2 cts for the six months to 30 June
1995, an increase of 14%.
DIVIDEND
An interim dividend of 9% or 9 cts per share
less income tax at 26% has been declared, compared with 8% or
8 cts per share less income tax at 27% for the six months to
30 June 1995. The dividend will be payable in cash on 30 September
1996 to shareholders whose registrable transfers are received
by the share registrars, Coopers & Lybrand, 9 Penang Road
#10-20 Park Mall, Singapore 238459 by 5.00 p.m. on 17 September
1996.
OPERATIONAL REVIEW
Motors
Earnings from the motor vehicle operations
increased by 6% over 1995 to S$72.7 million.
The size of the new car market in Singapore
fell by 12% to 15,130 units in the first half compared to the
previous year and there was a general softening in demand evidenced
by the fall in the number of COE bids being submitted. Other
factors such as restrictions on car loans, a lethargic stock market
and new government measures to curb speculation in property all
contributed to the weak underlying sentiment in the car market.
Against this background, Cycle & Carriage
maintained its share of the Singapore passenger car market at
over 25%. However, earnings from the Singapore motor vehicle
operations fell by 14% to S$50.6 million. More than 1,900 units
of Mercedes-Benz were sold during the period, 25% down on 1995
as sales of the new E-class did not commence until mid February
and 1995 sales benefitted from the popular run-out of the "Masterpiece".
Margins, however, remained steady during the first half. Sales
of Mitsubishi cars increased by 87% in the first half with strong
demand being seen for the new Lancer/Colt range which was launched
in January. Mitsubishi margins were down slightly. The Proton
marque did less well as competition in its market niche continued
to be intense.
Cycle & Carriage Bintang ("CCB")
had a good first half, announcing a profit after tax and minority
interests of RM39.5 million, 20% up on 1995. Demand for Mercedes-Benz
cars remained strong with sales of the C-class and S-class improving
due to higher assembly output and the importation of completely
built-up units. However, sales of the E-class were lower because
the old model was phased out at the end of 1995 and the locally
assembled new E-class was only available for sale from the second
quarter of 1996. Sales of both Mercedes-Benz and Mazda commercial
vehicles were well up on the corresponding period of 1995. CCB,
together with our Malaysian dealership operation, Cycle &
Carriage (Malaysia), contributed 16% of the Group's motor earnings.
Our Australian motor operation had another
good half. Hyundai car sales increased to 27,500 units, 45% up
on 1995, and Chrysler Jeep sales increased to 3,700 units, 46%
up on 1995. Margins for both marques remained steady. The Hyundai
range was recently enhanced through the launch of the new Coupe
and Chrysler sales will now benefit from the launch of the Grand
Cherokee in April and the Neon in August.
In New Zealand, our dealerships increased
profits on 1995, although there have been signs of market weakness
recently. The distribution of Chrysler models in New Zealand
has begun well and this together with our recently acquired Mitsubishi
dealership should serve to strengthen future earnings. Australia
and New Zealand together contributed 16% of the Group's motor
earnings.
Cycle & Carriage Thailand's sales declined by 29% and margins were under pressure due to the intense competition and severe price undercutting experienced. A loss was incurred, but, this was lower than the previous year. Ford has recently announced its intention to assume responsibility for distribution in Thailand as from October. In future, Cycle & Carriage Thailand will operate purely as a dealer.
The operations in Vietnam and Myanmar continue
to trade at a small loss.
Property
Property earnings for the first six months
were S$19.8 million, 29% up on the same period in 1995.
The Singapore property market which started
the year on an upbeat note has slowed down following the introduction
of measures by the government to cool the market and reduce the
level of speculative interest.
Malayan Credit has announced earnings of S$31.2 million for the half year, an increase of 88% on 1995. Investment property earnings were similar to 1995 but earnings from development properties rose substantially as profit was recognised from the Mera Terrace, Seven Oaks and Scotts 28 developments, all of which are fully sold. The percentage of profits recognised from these developments in the first half was 27%, 10% and 17% respectively.
CCL Group Properties contributed S$1.2 million
to the Group's earnings, 77% down on 1995. No further profit
was recognised on the MeraLodge development as construction stopped
in December 1995 when the contractor was put under judicial management.
A new contractor has now been appointed and construction resumed
in August and is expected to be completed before the hand-over
date. There was also no profit recognised on the MeraWoods development
which has not yet reached 10% completion. The construction of
the Weld tower is now largely completed and it is expected to
be ready for occupancy by the end of 1996.
Food & Retail
Net earnings from the Group's food &
retail interests were S$0.9 million, compared to a break-even
position in the first half of 1995.
Cold Storage (Malaysia)'s pharmacy and property operations performed in line with 1995, but the joint venture with Nestle made a significant loss. The impact of this, however, was offset by the write back of prior year tax provisions, no longer required.
Other Interests
Net earnings from Cycle & Carriage's
other interests increased by S$2.0 million to S$2.6 million.
The contribution from the Group's other
associates increased by S$1.5 million to S$3.9 million while overhead
and central financing costs incurred by the Group at S$1.3 million
were S$0.5 million lower.
Prospects
The volume of passenger car sales in the
Singapore market in the second half of 1996 is expected to be
15% lower than in the first half of the year and close to 20%
down on the corresponding period of 1995. This decline together
with the weak underlying consumer confidence mean that second
half profits from the Singapore motor operations are unlikely
to exceed those earned in the first half. The earnings from the
Group's motor interests outside Singapore are expected to continue
to grow steadily.
The residential sector of the property market
in Singapore has slowed down following the various measures recently
introduced by the government to curb speculation. These measures
are expected to have an impact on property sales, particularly
on the launches of new developments and those located outside
prime areas. However, underpinned by sustained economic growth,
the prospects for the property market in Singapore in the long
term are expected to be favourable.
Further development profits will be recognised
in the second half from projects which have already been sold.
These include both MeraLodge and MeraWoods, on which no profits
were recognised in the first half. Earnings from the Group's
investment properties are expected to remain stable in the second
half.
Barring unforeseen circumstances, the earnings for the full year are expected to be higher than in 1995.
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