Chairman's Statement

Overview

The Group’s underlying net profit for the first half of 2023 was US$823 million, 10% above the same period last year and ahead of pre-COVID levels in 2019. There were improved performances from most of the Group’s businesses in the first half of 2023, compared with the same period last year.

There was a continued very good performance from Astra, whose diversified portfolio enabled it to benefit from the strong overall economic recovery in the Indonesian market.

The results of DFI and Mandarin Oriental significantly improved from the prior year. Hongkong Land’s performance, however, was flat compared with the same period last year, as its residential Development Properties business continued to be impacted by a lower planned number of sales completions.

The profit contribution from the Group’s interest in Zhongsheng was significantly lower than in the prior year, as the business was impacted by lacklustre consumer demand in the mainstream car market, and the strong performance of the electric vehicle market, on the Chinese mainland.

The Group continues to benefit from its diversified exposure to the key growth markets of Asia. The strong performance of the Group’s businesses in Southeast Asia in the first half of 2023 led to 58% of earnings coming from that region and 37% from China (including Hong Kong). The Group’s businesses in Hong Kong made good progress following the reopening of borders in early 2023, and there were encouraging performances by Hongkong Land’s retail portfolio, DFI’s health & beauty and convenience businesses and Maxim’s, as visitor numbers began to recover and consumer spending improved.

Underlying earnings per share increased by 9% to US$2.84.

The Group recorded a net non-trading loss in the first half of US$257 million, compared with a net non-trading loss of US$324 million in the first half of 2022. This was mainly a result of a net fair value loss of US$482 million upon the revaluation of investment properties during the period, which was offset by the increase of US$54 million in the fair value of the Group’s other investments. The Group recorded a profit attributable to shareholders for the period of US$566 million, compared with US$423 million in the first half of 2022.

Dividend

The Board has announced an interim dividend of US¢60 per share, an increase of 9% over the prior year.   

Significant Developments

The Group continued to advance its strategic objectives in the first half of the year.

Evolving the Group Portfolio

The Group remains focussed on evolving its portfolio by deploying and, where appropriate, recycling capital towards strategic higher growth initiatives. The Group believes it is essential to continue to invest for the long-term in business opportunities which will drive future growth for our shareholders.

A good example of this is Astra’s agreement to acquire a 90% interest in the nickel mining and processing businesses, PT Stargate Pasific Resources and PT Stargate Mineral Asia, as part of its strategy of diversifying into other minerals and renewable energy.

In June 2023, United Tractors’ subsidiary, PT Danusa Tambang Nusantara, signed a share subscription agreement to acquire, for approximately US$630 million, a 19.9% stake in Nickel Industries Limited, a leading ASX-listed nickel mining and processing company with assets in Indonesia. This transaction further reflects United Tractors’ focus on deploying capital into, and securing future earnings from, non-coal businesses.

During the period, Jardine Cycle & Carriage (‘JC&C’) increased its interest in Refrigeration Electrical Engineering Corporation (‘REE’) from 33.6% to 34.4%, through on-market purchases.

The Group also continued to simplify its portfolio, by divesting a number of businesses which were no longer aligned to its strategic objectives.

The sale of the Group’s United Kingdom motors business was completed in March 2023 for proceeds of US$402 million. Also in March 2023, DFI completed the sale of its Malaysian Grocery Retail business, including the Giant brand. DFI will also divest several associated properties in Malaysia, with the sale expected to be completed in the second half of the year.

During the period, Cycle & Carriage Singapore benefitted from the proceeds realised from a sale and leaseback of its Singapore properties.

Driving Innovation and Operational Excellence

The Group continues to focus on delivering operational excellence in our existing and new businesses. There was strong progress in the period in driving greater efficiency and productivity in many of the Group’s businesses, including DFI, Jardine Engineering Corporation (‘JEC’), Gammon, Jardine Restaurant Group, Zung Fu and Hong Kong Air Cargo Terminals Limited (‘HACTL’), with a positive impact on results.  

HACTL has, for example, introduced robotics into some of its goods handling operations and automation more generally in areas such as automated parts sourcing and fleet monitoring systems. DFI’s transformation programme continued to deliver real improvements in operating metrics across its banners. The Group has also seen successful early transitions in Jardine Pacific into its new Global Business Services operation in Foshan, which will bring the business closer to driving improvements in its core back-office data, processes and systems.

The increased efficiencies which are being delivered across our businesses enhance their agility and adaptability and help them address the challenges they face in order to deliver future growth.

As well as driving operational excellence, a key strategic priority is innovation. In this context, Astra continued progress, with its partner WeLab, towards the planned launch of a digital bank, following the acquisition of PT Bank Jasa Jakarta. The digital bank will provide a wide range of online financial services to the under-banked market in Indonesia. In July 2023, Astra complemented and expanded its used car business by acquiring a 99.98% stake in Tokobagus, a leading Indonesian online classified advertisement platform operating under the OLX brand, connecting people to buy and sell goods (including cars). In June 2023, JC&C announced a used car and aftersales partnership with Carro, a leading online auto platform.

We have continued to embed innovation across our businesses, underscored by annual events such as Digital Day and LearnFest, where innovation-related themes are central to the agenda.

Enhancing Leadership and Entrepreneurialism

Jardines continues its work to build our diverse and inclusive culture where everyone can succeed. The Group's Diversity & Inclusion (‘D&I’) Strategy consists of two parts. The first is a 5-year target for D&I, with an initial focus on gender representation. In addition, each Group business has set its own targets to improve D&I in the workplace. The second focuses on five key enablers to drive behavioural and systemic changes. In the first half of 2023, D&I targets were introduced and included in senior leaders' KPIs and factored into their annual performance reviews.

The Group has a clear D&I ambition underpinned by a range of initiatives to drive awareness and understanding, including the introduction of D&I education programmes on inclusive leadership skills for the Group’s senior leaders and managers. D&I learning programmes are also now included in the Group’s new joiner onboarding programme.

At Jardines, building a Group that attracts, develops and retains exceptional leaders is a key priority and is critical to achieving our strategic ambitions. In May 2023, we announced chief executive leadership transitions in two of our Group companies: DFI and Mandarin Oriental.

At DFI, Scott Price will succeed Ian McLeod as Group Chief Executive with effect from 1st August 2023. Scott is an experienced senior business executive with 25 years’ international experience, most of which were spent in Asia, spanning the retail, logistics and consumer packaged goods sectors. Scott was most recently President, International at UPS. Prior to that he spent a number of years in senior positions at Walmart, including as CEO, Asia. We thank Ian for his six years as Group Chief Executive, leading a comprehensive business transformation to strengthen customer and product propositions, systems and processes and supply chain, in order to provide the group with a clear foundation upon which to build future growth.

At Mandarin Oriental, Laurent Kleitman will succeed James Riley as Group Chief Executive with effect from 1st September 2023. Laurent joins the Group from LVMH, where he was President and CEO of Parfums Christian Dior, and brings many years’ experience in building iconic consumer brands across the beauty and broader FMCG sectors. We thank James for his 30 years’ valued service to the Jardine Matheson Group and especially want to highlight his significant contribution as Group Chief Executive of Mandarin Oriental over the past seven years. James has been instrumental in continuing to expand Mandarin Oriental’s development pipeline, elevating the Mandarin Oriental brand globally and driving a wide range of effective sustainability initiatives across the group.

We continue to increase our efforts to support colleagues across our businesses in developing according to their potential and ambitions. This means providing more personalised mentoring and career development, engaging actively to support individual learning and mobility opportunities, recognising and rewarding performance, and continuing to promote a work environment that is diverse and inclusive. The Group also continues to support the growth of the next generation of leaders within our businesses by offering a variety of development programmes.

Progressing Sustainability

Sustainability is a key driver of the Group’s strategy, decisions and relationships and underpins our continuing focus on making the Group stronger for the future. The Group continued to progress its sustainability agenda during the period, with a particular focus on increasing the visibility of the extensive range of activities taking place across our businesses.

We published our second Group Sustainability Report at the end of May 2023. The Report highlighted the strong progress across the three pillars of the Group’s sustainability strategy in 2022. Under the pillar of Leading Climate Action, there was a particular focus on setting decarbonisation targets. Hongkong Land and Gammon have both obtained approval from the Science Based Targets initiative (‘SBTi’) for their 1.5°C-aligned 2030 targets, and other Group companies are following suit: Gammon and HACTL have submitted commitment letters to SBTi, while DFI has committed to 1.5°C-aligned scope 1 and 2 targets for 2030 and 2050.

Our businesses are developing decarbonisation pathways for their operational (Scope 1 and 2) greenhouse gas emissions. We recognise the importance of Scope 3 (value chain) emissions and are working towards understanding and reducing them in due course. 

The Group demonstrated its commitment to addressing climate change and promoting decarbonisation by publishing a statement in June 2022 clarifying its support for a Just Energy Transition to a low carbon economy in the geographies where we operate. The statement contains commitments to scale up investments in renewable energy and related innovations, diversify into non-coal mineral mining, and make no investments in new coal mines or new thermal coal-fired power plants.

In Driving Responsible Consumption, the Group has focussed during the period on reducing waste by strengthening waste management and exploring circular solutions to transform waste into valuable resources. The Group is also aiming to adopt industry-leading practices for biodiversity management and building up expertise to understand our dependencies and impacts on biodiversity.

In relation to the third pillar of our sustainability strategy, Shaping Social Inclusion, the Group has a particular focus on promoting education and health initiatives. It continues to provide opportunities to access quality education, including training for our colleagues and providing financial support for students from less affluent backgrounds to access higher education. The Group also advocates for greater awareness of mental health and invests significantly in mental health support. The Group is also investing to achieve positive changes to livelihoods and building stronger communities.

The Group-wide colleague volunteering programme, which aims to facilitate participation by colleagues across the Group in a range of social inclusion and other activities, continues to gather momentum.

People

The Company appointed Janine Feng as an Independent Non-Executive Director in May 2023, supporting our aim of enhancing our approach to governance and our ambition to increase the breadth and diversity of experience and backgrounds on the Company’s board.

Janine has also been appointed as an independent member of the Board’s Audit Committee. Janine brings valuable expertise and experience both as an independent non-executive director and as a seasoned executive with many years’ experience at Carlyle, focussed on Asian buyout opportunities in the financial services, consumer products and healthcare sectors.

Michael Wu was also appointed as an independent member of the Audit Committee in March 2023, in place of Adam Keswick, who stood down with effect from the same date. With these changes, the Board considers that the Audit Committee now comprises only Independent Non Executive Directors.

Outlook

We are encouraged by the results delivered by most of our businesses in the first half and are optimistic that earnings growth will continue in the remainder of the year.

The Group has a strong balance sheet and will continue to focus on opportunities in its core, growing markets in Asia, to create sustainable long-term growth.

Ben Keswick, Executive Chairman

Click here to read the full announcement. 

^{* The Group uses ‘underlying profit’ in its internal financial reporting to distinguish between ongoing business performance and non-trading items, as more fully described in note 7 to the condensed financial statements. Management considers this to be a key measure which provides additional information to enhance understanding of the Group’s underlying business performance.
# At 30th June 2023 and 31st December 2022, respectively. Net asset value per share is based on the book value of shareholders’ funds. 
The interim dividend of US¢60 per share will be payable on 11th October 2023 to shareholders on the register of members at the close of business on 18th August 2023 and will be available in cash with a scrip alternative.}