Simon Keswick, the chairman of Jardine International Motor Holdings, warns profits at the Jardine Matheson-controlled car trading arm are likely to drop this year. At the company's annual meeting yesterday, Mr Keswick said the difficult market conditions in Hong Kong and China in the second half of 1995 had continued into 1996 and were expected to persist for the rest of the year. 'As a consequence, despite steady progress elsewhere in the group, it is likely that the full year's trading performance will not match that of 1995,' he said. The company, which makes most of its money selling Mercedes-Benz cars in the territory, had a tough year in 1995. Operating profit fell 18 per cent to US$80.2 million from $95.7 million in 1994. Profits at the attributable level were boosted by the sale of its 16 per cent stake in United Merchants Finance for $43.8 million. In 1995, 22,710 new cars were registered in Hong Kong, a drop of 37 per cent from 1994. Zung Fu, the company's local arm, delivered 2,656 new cars during the year. Anthony Nightingale, joint managing director of the company, said market share in the territory had increased from 10 per cent in 1994 to 12 per cent in 1995 but margins had come under pressure. 'The market continues to be weak but there are signs of stability,' he said. 'We expect the next seven months of the year to be better than the first five. After a long period of quiet trading things are picking up. It is partly natural replacement, partly that the overall economy and spending is picking up.'