Sime Darby sets FY17 tar­gets

> Aim­ing for RM2.2b net profit and re­turn on av­er­age share­hold­ers’ equity of 6.4%

The Sun (Malaysia) - - SUNBIZ -

PETALING JAYA: Sime Darby Bhd, which posted a 37.15% rise in net profit for its first quar­ter ended Sept 30, 2016 (Q1), is tar­get­ing a net profit of RM2.2 bil­lion and re­turn on av­er­age share­hold­ers’ equity of 6.4% for the fi­nan­cial year end­ing June 30, 2017 (FY17).

In Q1, the group’s net profit rose 37.15% to RM443 mil­lion from RM323 mil­lion a year ago while rev­enue fell marginally to RM10.1 bil­lion from RM10.17 bil­lion a year ago.

In a fil­ing with Bursa Malaysia last Fri­day, the group said the im­proved net profit was mainly due to higher earn­ings from the mo­tor and the prop­erty di­vi­sions, as well as lower fi­nance costs.

Dur­ing the quar­ter, the mo­tors di­vi­sion’s profit rose 52.9% to RM130 mil­lion due to higher con­tri­bu­tion from all re­gions ex­cept Viet­nam, Aus­tralia and Ma­cau.

Higher profit was reg­is­tered from its Ford and car rental busi­ness in Malaysia, BMW in Sin­ga­pore and truck op­er­a­tions in New Zealand while Hong Kong recorded higher profit due to the gain on dis­posal of a prop­erty of RM30 mil­lion.

How­ever, con­tri­bu­tion from Viet­nam de­clined due to the im­pact of the changes to the Spe­cial Con­sump­tion Tax.

As for the prop­erty di­vi­sion, con­struc­tion progress in sev­eral town­ships was sig­nif­i­cantly lower dur­ing the quar­ter and no con­tri­bu­tion was recog­nised for the Pagoh Ed­u­ca­tion Hub project as con­struc­tion works had been sub­stan­tially com­pleted in FY16.

How­ever, it achieved a higher profit of RM172 mil­lion com­pared with RM102 mil­lion a year ago due to the gains on the dis­pos­als of 10% equity in­ter­est and con­vert­ible war­rants in Eastern & Ori­en­tal Bhd of RM35 mil­lion and the en­tire equity in­ter­est in Sime Darby Prop­erty (Alexan­dra) Pte Ltd of RM131 mil­lion.

The plan­ta­tion di­vi­sion’s profit fell RM29 mil­lion to RM273 mil­lion from a year ago due to lower fresh fruit bunch (FFB) pro­duc­tion, lower oil ex­trac­tion rate (OER) and lower crude palm oil (CPO) sales vol­ume.

FFB pro­duc­tion fell 23.8% to 2.154 mil­lion tonnes while OER fell from 22% to 21.3% due to pro­longed dry sea­son in parts of Malaysia and In­done­sia. CPO sales vol­ume fell 30.5%. These were partly mit­i­gated by higher av­er­age CPO price re­alised of RM2,592 per tonne com­pared with RM2,088 per tonne pre­vi­ously.

The in­dus­trial di­vi­sion’s con­tri­bu­tion fell 19% to RM51 mil­lion due to lower de­liv­er­ies to ship­yard and marine sec­tors in Sin­ga­pore as well as weak de­mand for equip­ment and prod­uct sales sup­port from con­struc­tion and min­ing sec­tors in China/Hong Kong.

Profit from the lo­gis­tics di­vi­sion was RM5 mil­lion lower com­pared with a year ago due to lower through­put at its ports in Jin­ing, China, as a re­sult of stiff com­pe­ti­tion from al­ter­nate modes of trans­porta­tion.

The re­sults were par­tially com­pen­sated by higher wa­ter con­sump­tion and higher through­put in Weifang port fol­low­ing the com­mence­ment of op­er­a­tions of the new 3 x 30,000 tonnes berth in Au­gust 2016.

“The group’s re­sults are a re­flec­tion of the op­er­at­ing en­vi­ron­ment to­day which is un­cer­tain on many fronts. Po­lit­i­cally and eco­nom­i­cally, we are ex­pe­ri­enc­ing un­cer­tain­ties and am­bi­gu­ity in just about ev­ery sec­tor,” pres­i­dent and group chief ex­ec­u­tive Tan Sri Mohd Bakke Salleh said.

The group noted pos­i­tive signs in the com­mod­ity mar­kets in re­cent months with CPO prices trend­ing at about RM2,800 per tonne on the back of tight sup­plies with crop pro­duc­tion ex­pected to re­cover in the com­ing months.

The con­tin­ued rally in coal prices has boosted min­ing ac­tiv­i­ties in Aus­tralia while the launch of up­com­ing new mod­els will be a cat­a­lyst for the mo­tor di­vi­sion, it said.

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