STAR PERFORMERS
Revenue rises to RM18.3b, helped mostly by industrial and motor divisions
SIME Darby Bhd’s industrial and automotive divisions contributed strongly to the group’s RM540 million net profit for the six months ended December 31, 2018.
SIME Darby Bhd saw its net profit surge 69.4 per cent to RM542 million in its half year ended December 31 2018 as it sets aside RM1 billion capital expenditure (capex) for the current financial to boost its core businesses of industrial, motor, logistics and healthcare.
Chief executive officer Datuk Jeffri Salim Davidson said industrial and motor were its strongest divisions, accounting for a combined 95 per cent of the group’s top line and bottom line during the six months.
Sime Darby’s revenue for the period grew 7.7 per cent to RM18.3 billion.
Jeffri said the industrial division performed the best with a 53 per cent year-on-year jump in core profit before interest and tax to RM348 million. This was due to higher equipment deliveries in Australia and higher margins from engines and product support.
“Sime Darby’s performance in the first half was pretty solid due largely to our industrial division in Australia. Demand for our products and services from the mining and construction sector there has been strong,” he said at a briefing on the company’s financial results briefing, here, yesterday.
“As of December 2018, the industrial order book stood at RM2.5 billion, a 14 per cent increase from RM2.2 billion in December 2017. In fact, we are experiencing healthy order books in markets we are in which are Australasia, China, Malaysia and the rest of Southeast Asia,” he added.
Jeffri said Sime Darby sold 45,190 vehicles in the six month period compared with 41,814 units previously. The group is mainly a luxury marque player selling BMW, Rolls-Royce, Porsche and Jaguar Land Rover, among others.
“In terms of assembly, we have 19,496 units assembled during the same period, compared with 11,917 in 1H 2018,” he added. Jeffri was “mildly” concerned about the outlook of the group’s motor business in China.
Besides Hong Kong, Macau and Taiwan, China is the group’s largest market for the motor segment.
“We have seen China’s economy softening over a certain period now, especially on the back of the weakening renminbi and trade tensions with the United States, which weighs on consumer confidence and vehicle spending there,” he added.
Jeffri expects rising interest rates and a softer housing market to dampen consumer spending in Hong Kong.
He said the group had used RM200 million of the RM1 billion capex in the first half.
Yesterday, Sime Darby also announced a first interim dividend of two sen per share.