INDUSTRIAL SEGMENT SET TO DRIVE GROUP’S GROWTH
Sime Darby upbeat on mining business in Australia
SIME Darby Bhd expects its industrial segment to drive growth in the current financial year ending June 30 2019, following the encouraging growth of the mining business in Australia.
Group chief executive officer Datuk Jeffri Salim Davidson said the mining sector in Australia has been under-invested over the past several years and as demand returns, supply is expected to be constrained until investment in new equipment and new mines catches up.
Sime Darby is the world’s third largest Caterpillar dealer, and its dealerships with the United States-based manufacturer of heavy equipment and power systems are via Hastings Deering Group of Australia.
“Australia’s mining industry is going full whack now as they (mining operators) did not fix or maintain their trucks. Last year, we saw a lot of old trucks come in for refurbishment, maintenance and repair — that will continue.
“We starting to see people replacing the fleet, so the orders are coming in.
“Maybe in couple of years, we will see extension of mines where operators will need a completely new fleet.
“We are quite positive of what is happening there. We may make most of our money in Australia’s mining space. I think mining fleet replacement activities should continue and this would drive the order book,” he said after Sime Darby’s annual general meeting here yesterday.
Jeffri said the group’s industrial order book currently stands at RM2.7 billion, with delivery of orders vary between six months and a year.
Last year, Sime Darby’s order book was at RM1.4 billion.
Jeffri said the group is looking to divest its port business in China as part of its efforts to divest non-core businesses.
Sime Darby is the primary operator of Weifang Port and owns three major river ports along the Grand Canal in Jining, in Shandong, China.
“The port business in China is one of the is top priority (noncore business divestment). It is more complicated as it is a port involving government relations that we have to manage. We are juggling with Chinese government too, as they want foreign investors to stay.
“Nevertheless, our port business in China is profitable. We saw some slowdown in throughput, impacted by trade war but it is still a profitable business.”
In the financial year ended June 30, Sime Darby’s logistics division entered into a sales and purchase agreement with Shuifa Group, a Shandong state-owned enterprise focused on the water industry, to divest 100 per cent of the division’s equity interests in Weifang Sime Darby Water Management Co Ltd.
The divestment of the water business was completed in September.