Jardine Pacific

• Underlying net profit of US$164 million, 10% lower than 2022
• Good performances by most businesses
• Consumer businesses impacted by weaker consumer sentiment in Hong Kong
• Jardine Schindler, Gammon and Transport Services saw improved performance

The Jardine Pacific group of companies reported underlying profit of US$164 million, 10% lower than 2022. There were good performances by most businesses, although the group’s consumer businesses continued to be impacted by weaker consumer sentiment in Hong Kong. The lower underlying profit was primarily due to the absence of government support and subsidies received last year (US$28 million), as well as the net loss incurred by Jardine Restaurants.

There was significant focus in the year across the group’s businesses on driving operational improvements, and the benefits are now starting to be seen in better business performance.

Within Jardine Pacific’s B2B businesses, Jardine Schindler produced a good performance with higher sales, although gross margins were impacted by mix. A stable contribution from the Existing Installation business helped offset the challenging New Installation market. JEC performed satisfactorily and its Hong Kong businesses reported solid performances. There were improvements from its regional businesses in Thailand and Singapore, and its order book remained strong.

Gammon reported higher profits, reflecting higher sales. Margins remained under pressure due to the timing of projects, but good cost control and higher financing income helped drive a better performance. Gammon’s ongoing operational improvement projects continue to generate encouraging results.

In Transport Services, there was a satisfactory performance from HACTL, despite lower cargo volume being handled and higher financing costs. Jardine Aviation reported a net profit for the year, benefitting from higher flight volumes as the recovery in air travel continued, as well as improved pricing from contract renewals. In March 2024, the group completed the sale of its 50% stake in Jardine Aviation. HACTL continues to face labour shortages.

The group’s consumer-facing businesses faced challenges. Jardine Restaurants incurred a net loss, with macro challenges seen across all markets and the absence of government support received in Hong Kong last year. In Hong Kong, weekend traffic has been impacted by the trend of Hong Kong locals increasingly visiting Shenzhen, and both Pizza Hut and KFC Hong Kong reported losses. The Taiwan operations performed well despite intensified competition, while the Vietnam businesses were impacted by the slow recovery in the Vietnamese economy.

Zung Fu Hong Kong reported a lower profit year on year. Despite higher Mercedes passenger cars deliveries and better aftersales performance, the overall contribution from Mercedes fell, driven by lower margins and commercial vehicles sales. Hyundai experienced supply constraints which impacted the number of car deliveries and margin. The business also incurred start-up costs from its newly acquired smart and Denza car distributorships.

Jardine Pacific reported a net non-trading gain of US$23 million in the year, compared to a net non-trading loss of US$305 million in 2022. The 2022 non-trading loss included a decrease in the fair value of the group’s investment properties and impairment of the group’s investments.