The motor trading arm of the Jardine Matheson Group, Jardine International Motor Holdings (JIMH), yesterday said its net profit fell 5.2 per cent to US$65.3 million in 1997 as a changing model mix in Hong Kong cut its profit margins. The company said its local Mercedes-Benz dealership Zung Fu saw sales rise 15 per cent over the year, but a shift towards lower-end models reduced turnover and margins. JIMH, the only Jardine company to remain listed in Hong Kong, said it sold and delivered about 80,800 new and used cars across its various operations in 1997, an increase of 25 per cent year on year. The company described the results as satisfactory, but warned the region's financial crisis would hamper the company's growth this year. 'The downturn in Asia's economy will inevitably have an effect upon Jardine International Motor's results in 1998, though we remain confident about the longer term,' chairman Anthony Nightingale said. The company said the change in the mix of its sales in Hong Kong was largely due to the model cycle. Customers were choosing to buy the newer C class models rather than the higher-end S class models. Mr Nightingale said some market share was also lost in Hong Kong, where the company derives about half its profits, as the overall growth was concentrated in the volume sector of the market. He said new orders exceeded deliveries by a substantial margin over the year, causing a large order book to be carried in 1998, which should help cushion the company against the expected slowdown. Mr Nightingale said the outlook for future orders was now poor in view of the deteriorating economic environment. He said, however, the company would continue its investments in training and in other facilities such as a new main showroom in Hong Kong. The performance of the group's operations elsewhere in the world was mixed. Sales in Indonesia were poor due to economic turmoil which erupted in the country. In Malaysia, the group's 13 per cent-owned Cycle & Carriage was affected towards the end of the year by the economic downturn. Sales in Britain were stronger, helped by the buoyant vehicle market and a series of acquisitions which increased the group's market share. In France, the group's Cica unit had a difficult year as the overall market for new cars was down 20 per cent in terms of unit sales.
