Sliding rupiah dents C&C gain

Sliding rupiah dents C&C gain

SINGAPORE (Dow Jones): Cycle & Carriage Ltd.'s earnings were dented by the sliding Indonesia rupiah, the Singapore car distributor said Tuesday.

It reported net profit for the first half ended June 30 fell sharply to S$19.3 million (US$11.1 million) from S$56 million in the same period last year. This was due to the unhedged U.S.- dollar debt of PT Astra International, in which Cycle & Carriage owns 31.1 percent.

Cycle & Carriage said its share of Astra's debt comes up to US$92.4 million. If not for the Astra debt and S$1.6 million of provisions at its MCL Land Ltd. unit, Cycle & Carriage said it would have earned S$83 million.

Cycle & Carriage acquired an initial 24.9 percent stake in Astra for US$309.4 million in March as part of an international consortium that bought 41.1 percent in Astra from the Indonesian Bank Restructuring Agency. Later, Cycle & Carriage bought another 6.4 percent in Astra for US$70.9 million.

Cycle & Carriage ventured into Indonesia after losing the exclusive right to import and distribute Mercedes-Benz automobiles to Singapore in December. Those operations were assumed by DaimlerChrysler AG, leaving Cycle & Carriage only a retail role.

The Astra deal had sparked hopes that Cycle & Carriage would overcome the loss of its Mercedes-Benz franchise to become a major regional automotive player. But since the deal was announced, the U.S. dollar has gained 20 percent against the rupiah.

The rupiah closed at Rp 8,965 versus the U.S. dollar late Tuesday in Asia as a result of political uncertainty in Indonesia, after a bomb blast in Jakarta earlier in the day killed three and ripped apart a car carrying the Philippine ambassador as it entered his official residence.

Even so, Cycle & Carriage said Tuesday: "Astra will enable Cycle & Carriage to focus on its core competency in the automotive sector and also diversify its earnings base through Astra's non-automotive business."

Astra produces Indonesia's best-selling Kijang multipurpose vehicle under a joint venture with Toyota Motor Corp., and it has similar deals with other foreign car manufacturers. It also has a plantation unit, a heavy machinery distributor and a technology concern.

"Astra should continue to perform satisfactorily at the trading level," Cycle & Carriage said. "It is hoped that political stability (in Indonesia) will restrict any further decline in the rupiah and limit the consequent foreign exchange losses."

Overall, Cycle & Carriage said, earnings from motor vehicle operations jumped 164 percent to S$64.9 million, thanks in part to a surge in sales in Singapore and Malaysia.

Cycle & Carriage Bintang Bhd., the company's Malaysian unit, Monday said first-half net profit rose to 40.54 million Malaysian ringgit from 37.56 million ringgit in the year-ago period.

At its MCL Land property unit, net profit fell to S$9 million in the first half ended June 30, from S$13.1 million on year, partly due to a slowdown in the residential property market.