28th July 2022

For immediate release

 

The following announcement was issued today to a Regulatory Information Service approved by the Financial Conduct Authority in the United Kingdom.

 

Jardine Matheson Holdings Limited

Half-Year Results for the Six Months ended 30th June 2022

 

STRONG RECOVERY CONTINUES, UNCERTAINTY REMAINS IN CHINA

 

Highlights

 

·	Underlying profit of US$747 million for the period, up 22% against the prior year
·	Underlying earnings per share of US$2.60, up 40% against 2021
·	Performance of most businesses improves, with strong growth in Southeast Asia, particularly by Astra, and further contribution from simplification of the Group's holding structure
·	Hong Kong and Chinese mainland businesses impacted by continuing pandemic restrictions
·	DFI Retail profit reduced by performance of associates and investment in e-commerce
·	Interim dividend at US¢55, up 25%, reflecting a rebalance towards interim as well as strong earnings per share growth.

 

"There was a strong improvement in the Group's profitability in the first half compared with the same period last year, with a significantly improved performance in Southeast Asia, particularly by Astra, and a further contribution to growth from the simplification of the Group's holding structure.  The Group expects, however, that earnings growth will substantially moderate for the full year, as COVID-19 continues to impact the Group's businesses, particularly in Hong Kong and on the Chinese mainland. 

 

On behalf of the Board, I would like to thank all our colleagues across the Group for their continuing dedication, hard work and professionalism during such challenging times.

 

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

 

Ben Keswick, Executive Chairman

 

Results

 

(unaudited) Six months ended 30th June
		2022 US$m	2021 US$m		Change %
Gross revenue including 100% of associates and joint ventures		55,994	52,488		+7
Revenue		18,277	17,492		+4
Underlying profit* attributable to shareholders		747	615		+22
Profit/(loss) attributable to shareholders		423	(117)		n/a
Shareholders' funds#		29,228	29,781		-2
		US$	US$		%
Underlying earnings per share*		2.60	1.86		+40
Earnings/(loss) per share		1.47	(0.35)		n/a
Net asset value per share#		101.00	102.87		-2
		US¢	US¢		%
Interim dividend per share		55.00	44.00		+25
*	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 2022 and 31st December 2021, respectively. Net asset value per share is based on the book value of shareholders' funds.

 

The interim dividend of US¢55.00 per share will be payable on 12th October 2022 to shareholders on the register of members at the close of business on 19th August 2022 and will be available in cash with a scrip alternative.

 

CHAIRMAN'S STATEMENT

Overview

The Group's underlying net profit for the first half was US$747 million, 22% higher than the same period last year, and returning to the levels seen prior to the onset of the pandemic.  Within this, 13 percentage-points of growth was driven by improved business performance, with the balance reflecting a higher share of earnings in businesses formerly owned by Jardine Strategic Holdings Limited ('JSH'), following the completion in mid-April 2021 of the privatisation of JSH (the 'Group Simplification'). 

There were improved performances from most of the Group's businesses in the first half of 2022, compared with the same period last year, with particularly strong growth in Southeast Asia, led by Astra.  Jardine Cycle & Carriage ('JC&C'), the Group's Motors business and Hongkong Land also saw increases in underlying profit, and Mandarin Oriental delivered a lower underlying loss than the same period last year. 

DFI Retail Group ('DFI') saw a decline year-on-year in the performance of their businesses, impacted by the resurgence in the first half of the pandemic on the Chinese mainland and in Hong Kong.  The absence of Chinese mainland tourists also continued to impact the performance of the Group's businesses in Hong Kong, including Hongkong Land's Central retail portfolio, DFI's health and beauty business and Mandarin Oriental's hotels. 

The Group continues to benefit from its diversified exposure to the key growth markets of Asia, with the different pathways of China and Southeast Asia across the pandemic bringing resilience to our earnings and growth.  The strong performance of the Group's businesses in Southeast Asia in the first half of 2022 led to 58% of the Group's profit for the period coming from Southeast Asia and 37% coming from China.  

Underlying earnings per share increased by 40% to US$2.60.  Just over half of this growth (+24 percentage-points) reflected impacts of the Group Simplification, combining the effect on underlying net profits of a higher share of earnings, as above, with the reduction in the effective share count in Jardine Matheson Holdings Limited (the 'Company') following the elimination of the cross-shareholding held by JSH in the Company, which concluded in May 2022 and has now, therefore, fully annualised.

Group revenue for the period was 4% higher at US$18.3 billion, while gross revenue, including 100% of associates and joint ventures, was up 7% at US$56.0 billion.

The Group recorded a non-trading net loss in the first half of US$324 million, compared with a non-trading net loss of US$732 million in the first half of 2021.  This was as a result of a net decrease of US$148 million in the fair value of the Group's other investments, the impairment of goodwill and investment in associates of US$114 million, and a net fair value loss of US$70 million upon the semi-annual revaluation of investment properties in Hongkong Land as at 30^th June 2022.  The Group recorded a profit attributable to shareholders for the period of US$423 million, compared with a loss of US$117 million in the first half of 2021. 

Dividend

The Board has announced an interim dividend of US¢55 per share, an increase of 25% over the prior year.  This reflects both the strong EPS growth in the first half of the year and the Board's decision to revert to a higher proportion of the total dividend for the year to be paid at interim as the effects of the pandemic and the impacts of the Group Simplification recede.

Significant Developments

The first half of the year continued to demonstrate the importance of the Group applying innovation and adaptability in its business approach.  The pace of change continues to accelerate, however, so we need to further drive forward our strategic priorities in the second 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.   

During the first half, Astra purchased a 5.43% stake in PT Medikaloka Hermina Tbk, one of the largest hospital groups in Indonesia, operating as Hermina Hospitals, which has an established brand in women's and children's care. 

In February 2022, a joint venture was announced between Astra, Hongkong Land and LOGOS, a leading modern warehousing expert, to expand logistics facilities across Indonesia.  

Astra continues to invest in digital businesses in Indonesia, and in the period it acquired an interest in Paxel, a technology-based logistics startup, and increased its investments in Sayurbox, an e-commerce grocery farm-to-table platform and Mapan, a digital community-based social financing platform.  In July 2022, Astra subscribed for a 49.56% stake in PT Bank Jasa Jakarta ('Bank Jasa Jakarta') for US$260 million, to support Astra Financial Services' business development and digital offering. The transaction is subject to satisfaction of conditions precedent and regulatory approval.

During the period, Hongkong Land secured a 34% interest in a primarily residential site in Xuhui District in Shanghai, adjacent to the group's existing 1.1 million sq. m. mixed-used project in West Bund.  It also acquired a 49% interest in a residential site in the Tanjong Katong area in Singapore, with a developable area of 599,000 sq. ft. 

In July 2022, JC&C announced a general offer to acquire the remaining shares in Cycle & Carriage Bintang, which it did not already own.  JC&C also increased its interest in Refrigeration Electrical Engineering Corporation ('REE') in the period through on-market purchases.

In July 2022, United Tractors announced a share buyback of up to US$333 million.

Also in July 2022, Mandarin Oriental announced the sale of its Washington DC hotel for gross proceeds of US$139 million.  This sale is consistent with the Group's strategy of driving future growth primarily through development of its management business.  The Group has an exciting pipeline of hotels worldwide in locations and properties which support its long-term vision for the brand.

Driving Innovation and Operational Excellence

The Group also continues to focus on driving innovation and operational excellence in our businesses and in new ventures we undertake.  Despite the challenging market environment, our businesses continued to introduce greater efficiency and productivity. 

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

DFI's yuu coalition loyalty programme continues to exceed expectations and now has more than four million members.  It has built partnerships with a range of complementary businesses, including Maxim's restaurants, insurance partners and, most recently, in February 2022, a fuel partner.  In May 2022, yuu-to-me was launched, offering customers an integrated one-stop online shopping experience across leading Hong Kong brands on a single mobile app. 

The Group remains focussed on making efficiency improvements across its existing businesses to drive future growth.  Good progress has been made in a number of businesses, including JEC, HACTL, Jardine Restaurants and Gammon, to implement measures in areas such as procurement, shared resources and operations.  HACTL has, for example, increased its capacity to handle pallets by 30% by enhancing its use of robotics, as well as introducing automation more generally to increase efficiency.  The Group has also begun implementation of an in-house Global Business Services function, to serve the growth and technology needs of its subsidiary businesses.

Enhancing Leadership and Entrepreneurialism

Jardines continues its work to create a diverse and inclusive culture where everyone can succeed.  During the period, we launched a new diversity and inclusion ('D&I') strategy to help progress our ambitions across the Group.  New initiatives included a learning campaign on inclusive leadership, a comprehensive review to enhance HR policies and new processes which support D&I.  We have also developed targets for increasing female representation in our workforce and leadership.  We recognise further progress needs to be made to achieve our objectives.  

The Group is working hard to support the growth of the next generation of leaders within our businesses, ensuring our colleagues can develop the skills they need. 

We are also aiming to create an owner mindset among our staff, and supporting this by enhancing our incentive structures to focus less on current profits and more on value creation over a longer time horizon.  This longer-term view also incentivises experimentation and innovation.

The Group's Investment and Business Development Committee ('IBDC') is accelerating decision-making and helping us establish and support new teams, as well as bringing focus to specific project investment proposals.  The IBDC also references macro trends to identify new opportunities to grow and serve our customers across Asia.

Progressing Sustainability

The Group has made substantial progress in driving its sustainability agenda and increasing visibility of the extensive range of activity taking place across our businesses.

An important milestone in the Group's sustainability journey was the publication of our inaugural Sustainability Report at the end of June.  This followed extensive work over the past year to set appropriate metrics and gather data from each of our businesses, to enable the Group to measure and report on progress in implementing the sustainability agenda.  Eight other Group businesses also published sustainability reports during the first half, three for the first time.

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 thermal or metallurgical coal mines or new thermal coal-fired power plants.

In addition, the Company and JC&C published TCFD-aligned disclosures in their sustainability reports.

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

People

Ensuring the safety and wellbeing of our people remains a top priority, as they face extensive challenges amid the ongoing pandemic.  We continue to support our colleagues' health and wellbeing and invest in their development.  We would like to thank all our colleagues for their continuing dedication, hard work and professionalism throughout the period.

Outlook

There was a strong improvement in the Group's profitability in the first half compared to the same period last year, with a significantly improved performance in Southeast Asia and a further contribution to growth from the simplification of the Group's holding structure, which has now fully annualised.  COVID-19 continues to impact the Group's businesses in Hong Kong and on the Chinese mainland, however, and conditions there remain uncertain for the second half of the year. 

Taking this together with expected lower sales in Hongkong Land's mainland China development property business and stronger comparable results in the second half of 2021, the Group expects growth to substantially moderate for the full year.

The Group remains confident that its businesses have the right strategic focus and valued market positions and are progressing well to meet the rapidly-evolving needs of their customers.  With this foundation and substantial resources available to leverage attractive investment opportunities in our core growth markets across Asia, the Group is well positioned to drive sustainable mid- and long-term earnings growth.

 

Ben Keswick

Executive Chairman

 

OPERATING REVIEW

The performance of the Group's businesses is described below, in descending order of contribution to the Group's underlying profit for the first half of the year.

Astra

Astra reported a net profit equivalent to US$1,254 million under Indonesian reporting standards in the first half, a 106% increase on the same period last year and ahead of pre-pandemic levels.  There were record performances from almost all its businesses in the period, benefitting from improved economic conditions, substantially elevated commodity prices and continued strong business performance.  The half-year net profit also included a mark-to-market fair value gain on the group's investment in GoTo of US$250 million.

Net income from Astra's automotive business increased significantly to US$295 million, reflecting an increase in sales volumes.  The wholesale car market increased by 21% in the first half, and Astra's car sales were 23% higher, with its market share increasing slightly to 54%.  The wholesale market for motorcycles decreased by 8%, and Astra's Honda motorcycle sales fell by 13%, due to production constraints caused by semiconductor supply issues.  As a result, its market share also decreased.  Astra Otoparts reported a 62% increase in profit, mainly due to higher revenues from the original equipment manufacturer and replacement market segments.

Net income from the Financial Services division increased by 36% to US$200 million, due to higher contributions from the consumer finance businesses. Consumer finance businesses saw a 18% increase in the amounts financed, while the net income contribution from the group's car-focussed finance companies increased by 47% on larger loan portfolios. The contribution from the motorcycle-focussed financing business increased significantly, due to lower levels of non-performing loans. Heavy equipment-focussed finance operations saw a 112% increase in the amounts financed and the net income contribution from this business was 52% higher. General insurance company, Asuransi Astra Buana, reported a 6% increase in net income, due to higher underwriting income and investment income.

The Heavy Equipment, Mining, Construction and Energy division saw net income increase by 131% to US$427 million, mainly due to higher contributions from heavy equipment sales, mining contracting and coal mining, all of which benefitted from higher coal prices.  There were, however, some adverse impacts on coal operating volumes arising from the temporary export ban on coal. United Tractors reported a 129% increase in net income to US$715 million.  Komatsu heavy equipment sales increased by 111% and saw higher revenues from its parts and service businesses.  Mining contracting operations reported 6% higher overburden removal volume, while coal production fell by 13%.  United Tractors' coal mining subsidiaries recorded 8% lower coal sales, but this volume impact was more than offset by higher coal selling prices.  Agincourt Resources saw 18% lower gold sales volumes.

Net income from Agribusiness increased by 25% to US$44 million, mainly due to improved crude palm oil prices.  The group's palm oil operations were impacted in the period by the export ban on palm oil imposed by the Indonesian government, but the ban is expected to be temporary.  The group's Infrastructure and Logistics division reported a 288% increase in net profit, mainly due to improved performance in its toll road businesses.  Astra now has interests in 396km of operational toll roads along the Trans-Java network and the Jakarta Outer Ring Road.

Hongkong Land

Hongkong Land's underlying profit attributable to shareholders for the first six months of 2022 was US$425 million, up 8% from the equivalent period in 2021.  There was a profit attributable to shareholders of US$292 million, after accounting for a net non-cash loss of US$133 million arising from the semi-annual revaluation of investment properties.  This compares with a loss attributable to shareholders of US$865 million in the first half of 2021, which included a net revaluation loss of US$1.3 billion.  The group's financial position remains robust, with a strong balance sheet and liquidity.

On the Chinese mainland, Hongkong Land's development properties business saw more sales completions in the first half of 2022, resulting in higher profits than the same period last year.  There was, however, weak sentiment in the majority of its key markets, impacting contracted sales despite the continued relaxation of cooling measures.

The planned timing of sales completions and the impact of pandemic-related restrictions on construction activities, however, mean that profits from the group's Chinese mainland development properties business will be lower in the second half and some projects will be deferred into 2023.

Pandemic-related shutdowns impacted construction progress at the group's mixed-use Galaxy Midtown project in Shanghai, possibly delaying anticipated sales completions from the end of 2022 into early 2023.

Market sentiment was also weak in a majority of the group's key markets, impacting contracted sales despite the continued relaxation of cooling measures.  The group's attributable interest in contracted sales was US$419 million in the first half of 2022, compared to US$1,360 million and US$1,288 million in the first and second halves of 2021, respectively.  At 30th June 2022, the group had US$2,425 million in sold but unrecognised contracted sales, compared with US$2,853 million at the end of 2021.

Results from the group's residential development activities in Singapore declined slightly compared to the first half of 2021, primarily due to lower completion progress on projects. In addition, sales demand for the group's projects in the rest of Southeast Asia was generally subdued.

Contributions from the Investment Properties business remained resilient, despite negative rental reversions in Hong Kong.

The group's investment properties business in Hong Kong saw a strong start to the year.  Anti-pandemic measures introduced later in the first quarter, however, as the number of COVID-19 cases increased, impacted the number of new office leasing enquiries and resulted in the group providing rental support to a select number of retail tenants.  The group's Central office portfolio nevertheless continued to benefit from a flight to quality, as a number of new tenants committed to long-term leases.  Physical vacancy was 5.4% at the end of June 2022, compared to 5.2% at the end of 2021, and on a committed basis, it was 5.1%, compared to 4.9% at the end of 2021. 

Hongkong Land's office portfolio in Singapore continued to benefit from healthy leasing momentum, and vacancy on a committed basis remained low.

Vacancy at the group's Central retail portfolio was unchanged from the end of 2021, although base rental reversions remained negative.  Tourism has not yet returned to Hong Kong due to travel and quarantine restrictions, adversely impacting retail sales levels. 

A number of luxury brands opened new stores as planned in Beijing and Macau, despite the market challenges faced by the group's retail operations due to pandemic-related restrictions, which negatively impacted footfall and tenant sales.

In Shanghai, city-wide lockdowns saw development activities at the multi-phase West Bund site suspended for over two months, although construction has since resumed. 

Jardine Motors

Jardine Motors delivered a 12% increase in underlying net profit to US$172 million for the first half of the year.  Zhongsheng, in which the Group owns a 21% interest, and which acquired the Group's Zung Fu China business in October 2021, recorded an 89% higher contribution of US$150 million, relating to its performance for the six months from July to December 2021.  There was a 24% year-on-year increase in the contribution from the United Kingdom business, driven by strong margins on both new and used cars, although new car volume remained low due to supply constraints caused by the ongoing global semiconductor shortage. 

Jardine Pacific

Jardine Pacific reported a 7% lower underlying net profit of US$71 million in the first half, compared with an underlying net profit of US$76 million in the equivalent period in 2021.  There was an adverse impact on the performance of a number of Jardine Pacific's businesses from the resurgence of the pandemic in Hong Kong, which was partially offset by the benefits realised from ongoing operational improvements and government support.  

Jardine Pacific operates within three main business segments: engineering, consumer businesses and transport services.

Within the group's engineering businesses, JEC's contribution was lower than last year, primarily as a result of project delays, but strong levels of new work were secured in the period, leading to a record order book at the half-year.  Jardine Schindler's contribution was lower than the same period last year, with softer sales in its New Installation and Modernisation businesses and a weaker margin overall.  Gammon delivered good profit growth, largely due to the timing of project completions, and its order book remains strong.

Within Jardine Pacific's consumer businesses, Jardine Restaurants Group reported a weaker performance overall, as strong delivery sales in Pizza Hut Taiwan and benefits from process re-engineering projects were offset by poorer performances in both Pizza Hut and KFC Hong Kong, caused by the pandemic restrictions there. 

The Zung Fu business in Hong Kong and Macau reported a profit for the period, as after-sales activities picked up in the second quarter, despite fewer passenger car deliveries.

Within Jardine Transport Services, HACTL's contribution fell compared with the same period last year, with lower volumes as export demand softened. Jardine Aviation reported a higher loss, with flight volumes remaining low.    

Greatview continued to see volume growth in both the China and international markets, but its business was impacted by both rising raw material costs and higher supply chain costs, resulting in a significantly weaker profit performance.  

Jardine Cycle & Carriage

Jardine Cycle & Carriage delivered strong results in the first half of 2022, compared to the same period in 2021, with underlying profit 51% higher at US$522 million, mainly due to higher contributions from Astra and its investment in THACO.  Excluding the Astra contribution of US$465 million, the business reported an underlying profit for the period of US$57 million, 9% higher than the first half of 2021. 

THACO contributed a US$52 million profit, 43% higher than the same period last year, mainly due to strong performance from its automotive operations.  The business benefitted from a temporary reduction in registration fees for locally-assembled vehicles and saw margins increase due to an improved sales mix.

There was a 20% higher contribution of US$28 million from the group's Direct Motor Interests.  Lower profits from the Singapore operations - where car sales fell as sales volume was adversely impacted by high Certificate of Entitlement ('COE') prices and stock supply shortages - were more than offset by an improved performance by Tunas Ridean in Indonesia, which saw increased profitability across its automotive and financial services businesses.  Cycle & Carriage Bintang in Malaysia also contributed an improved profit despite challenging trading conditions, with higher business volume due to the sales tax reduction and the impact of cost savings initiatives.

Among JC&C's other interests, the contribution from Siam City Cement was 9% higher than the same period last year at US$15 million.  There were higher cement volumes and prices in most of its markets, but profits were adversely impacted by inflationary pressure, high energy costs and the challenging economic conditions in Sri Lanka.

REE's contribution of US$9 million, based on its first-quarter results, was 71% higher than the previous year, due to an improved performance from its hydropower investments, reflecting favourable hydrography.  REE has an increasing focus on its investments in renewable energy sources, which also include solar.

JC&C's investment in Vinamilk produced a dividend income of US$9 million, compared to US$11 million last year.  Vinamilk reported a 20% decrease in net profit, mainly due to higher raw material and transportation costs.

 

Mandarin Oriental

Mandarin Oriental reported a lower underlying loss of US$21 million for the first half of the year, a 69% improvement from the loss of US$67 million incurred in the equivalent period in 2021. 

Except for its properties in North Asia, where government restrictions on international and domestic travel remained in place, the performance of the group's hotels substantially recovered during the first half, with some properties achieving room rates exceeding pre-COVID-19 levels. 

In Europe, the Middle East and Africa, and America, where pandemic restrictions were largely relaxed, the group benefitted from strong leisure demand, with rates at or above pre-pandemic levels and improving occupancy levels.

Demand in North Asia remained impacted by government restrictions to contain regional COVID-19 outbreaks.  In other Asian markets, however, pandemic restrictions slowly eased, allowing a gradual recovery in occupancy levels.

The group continues to have a strong pipeline of future openings, with 25 announced projects to open in the next five years, almost doubling the number of properties operated by the group.  The new properties comprise eleven standalone hotel projects, eleven projects with hotel and residence components and three standalone residences projects.

The valuation of the Causeway Bay site under development remained broadly in line with the valuation at 31st December 2021.

DFI Retail Group

The performance of DFI in the first half of 2022 was impacted by a number of challenges.  There were poor performances by key associates Yonghui and Maxim's, as well as reduced profit contributions from Grocery Retail and Convenience, which faced a combination of inflationary cost pressures and changing customer behaviours.  The weaker performances of these businesses more than offset strong Health and Beauty profit growth and an increased contribution from IKEA.  DFI increased planned investments in digital capacity and capability during the period.  While these reduced profit in the period, they are necessary to meet customers' evolving needs for on-and off-line service and are made with a view to driving long-term sustainable growth. 

The group saw sales of US$4.5 billion for the period by its subsidiaries, 1% lower than the prior year.  It reported an underlying loss of US$52 million for the first half, primarily due to US$60 million losses attributable to associates.  This compares with an underlying profit of US$32 million for the equivalent period in 2021.

DFI's share of Yonghui's underlying losses for the six months ended March 2022 was US$38 million, including a US$64 million share of losses for the final quarter of 2021.  Encouragingly, Yonghui reported improvements in like-for-like sales and profitability in the first quarter of 2022.

In addition, the group's 50%-owned associate, Maxim's, contributed a US$26 million loss in the first half.  Performance in the first quarter was severely impacted by government-imposed dining restrictions in Hong Kong to address a further wave of COVID-19 cases there, as well as temporary lockdowns on the Chinese mainland.  Sales, however, started to recover in Hong Kong over the second quarter as restrictions eased.

Like-for-like sales by the Grocery Retail business in the first half were slightly behind the prior year.  There was good sales growth in North Asia driven by pantry-stocking behaviour and strong in-store execution, despite challenging external conditions and supply chain constraints, particularly in the first quarter.  Sales performance in Southeast Asia was, however, impacted by the easing of movement restrictions, which led to a reduction in eating-at-home, store renovation disruptions in Singapore and stock availability issues in Malaysia.  Profitability in the half was lower than the comparable period last year due to a combination of inflation impacting cost of goods sold, e-commerce investment costs and operating cost pressures.

The Health and Beauty business reported strong sales recovery in the first half.  Sales by Mannings in Hong Kong were supported by effective in-store execution and a surge in demand for pandemic-related products and over-the-counter medicines.  Guardian reported strong like-for-like sales growth across key geographies, driven by a combination of a recovery in mall and tourist locations, demand for pandemic-related products and effective store-level execution.  The profitability of the business also grew strongly in the first half, driven by the sales recovery, effective promotion management and cost control.

DFI's Convenience business saw varying operating performances across regions in the first half, as pandemic-related restrictions continued to impact North Asia.

Like-for-like sales for IKEA were lower in the first quarter, as the pandemic continued to disrupt store operating capacity and there was reduced stock availability.  Like-for-like sales improved in the second quarter, however, and IKEA's profitability in the first half was ahead of the same period last year.

Financial Position

The balance sheet and liquidity of the Group remain strong.

Shareholders' funds were US$29.2 billion at 30th June 2022, compared with US$29.8 billion at 31st December 2021. 

Consolidated net debt excluding financial services companies was US$7.8 billion at 30th June 2022, representing gearing of 14%, compared with 11% at 31st December 2021.  

The Group had liquidity of US$12.7 billion as at 30th June 2022, consisting of US$6.4 billion in cash reserves and US$6.3 billion in unused, committed debt facilities.