‘Sime Darby not in a hurry to divest non-core assets’
KUALA LUMPUR: Sime Darby Bhd is looking at trimming its non-core assets, even though it is not in a hurry to do so, as part of its five-year plan to create value for the group two years after its demerger exercise.
Its group chief executive officer, Datuk Jeffri Salim Davidson said the group had seen good progress in its noncore asset rationalisation plan, with some divestment exercises completed in the financial year ended June 30, 2019.
These include the disposal of Weifang Sime Darby Water Management Co Ltd and Sime Darby Global Service Centre, as well as exiting Fiat and Alfa Romeo in Australia.
“We have been quite clear in our direction of divesting our non-core assets.
However, we are not in an urgent position to sell. We will continue to explore our options and divest when time and valuations are optimum,” he told Bernama in an interview recently.
Currently, Sime Darby’s noncore assets include a 12 per cent stake in Eastern & Oriental, 3,561.23 hectares of land in the Malaysia Vision Valley in Negeri Sembilan and a 30 per cent stake in Tesco Malaysia.
When the land in Malaysia
Vision Valley gets developed, we will eventually divest it when it becomes more developed around there, said Jeffri.
The much anticipated demerger of the Sime Darby group was completed on Nov 10, 2017, with the separate listing of three entities, breaking one of the country’s largest conglomerates into pure-plays and allowing the individual businesses to measure up against similar peers.
Sime Darby now focuses on the industrial, motors and healthcare sectors.
The group is one of the largest BMW and Caterpillar dealers in the world.
“The demerger has enabled Sime Darby to chart our own path and focus on our core trading businesses of motors and industrial (equipment), as well as healthcare, which is still relatively small but we are looking to grow it,” said Jeffri.
He noted that the group had set out its strategy for the next five years via a five-year Value Creation Plan that focused on several areas, including revenue enhancement, cost optimisation, monetisation of non-core assets, synergistic merger and acquisition, and expansion of the healthcare division.
Jeffri said Sime Darby would need to grow its business organically and via acquisitions, with continuous focus on Asia Pacific.
“We have got a war chest in a sense. We have the opportunity to buy when people are trying to sell (but) it all depends on the valuation ultimately,” he noted.
Sime Darby had already invested RM1 billion in the current financial year ending June 30, 2020 for the acquisition of Gough Group and three Trivett dealerships in Australia.
Jeffri said the Gough Group acquisition was particular appealing as Caterpillar dealerships did not come up for sale very often and it also spoke volumes about Sime Darby’s track record and relationship with Caterpillar. — Bernama