Sime Darby's 4Q profit up 13.3% on Indonesian special tax incentive

KUALA LUMPUR (Aug 23): Sime Darby Bhd’s fourth quarter net profit climbed 13.36% to RM1.13 billion or 17.97 sen per share, from RM1 billion or 16.14 sen per share a year earlier, helped by recognition of an Indonesian special tax incentive.

Revenue for the quarter ended March 31, 2016 (4QFY16) slipped 8.8% to RM11.7 billion, from RM12.86 million in 4QFY15, Sime Darby said in a filing with Bursa Malaysia today.

It recommended a final single tier dividend of 21 sen. The entitlement and payment dates would be announced later.

For the full year (FY16), net profit fell slightly to RM2.41 billion or 38.43 sen per share, versus RM2.43 billion or 39.57 sen per share in FY15. Revenue rose 0.5% to RM43.9 billion, from RM43.7 billion.

The group said it exceeded its FY16 net profit Key Performance Indicator (KPI) target of RM2 billion by 20%, and the return on average shareholders’ equity at 7.6% was 1.3% higher than the target of 6.3%.

Sime Darby president and group chief executive Tan Sri Mohd Bakke Salleh said the group withstood the challenging market conditions and exceeded its KPI targets for FY16, despite the uncertainties caused by commodity price volatilities and the economic situation in its key markets.

The plantation division registered a profit before interest and tax (PBIT) of RM499.3 million for 4QFY16, up 2% compared with RM489.4 million a year earlier, mainly due to higher average crude palm oil (CPO) price realised of RM2,636 per tonne, versus RM2,242 in 4QFY15.

Going forward in this division, Sime Darby said apart from accelerating replanting of high-yielding genome planting materials, it would also implement innovative water and fertiliser management, invest in precision agriculture technologies and carry out new milling processes to enhance internal Certified Sustainable Palm Oil (CSPO) yields.

Turning to the industrial division, Sime Darby said 4QFY16 profit improved 3% to RM129 million, largely due to cost benefit realisation on completion of projects, mainly in China, and a gain on disposal of a Malaysian property, amounting to RM10 million.

The motors division posted a PBIT of RM197.1 million, compared with RM142.4 million in 4QFY15, as a result of a 38% improvement that was driven by higher profit in all regions, except Malaysia and Taiwan.

The property division reported a 29% lower PBIT of RM293.6 million, from RM416.4 million a year earlier, mainly due to a gain on disposal of the 50% equity interest in Sime Darby Sunsuria Development Sdn Bhd, amounting to RM157.2 million registered in the same period last year.

“The drop was partially mitigated by the adjustment to the gain on deconsolidation of two subsidiaries in Singapore of RM40.8 million, the gain on disposal of Syarikat Malacca Straits Inn Sdn Bhd of RM39.4 million, and the gain on disposal of land in Semenyih of RM184.5 million in 4QFY16,” it said.

PBIT in the energy and utilities division was 0.26% higher at RM37.4 million against RM37.3 million in 4QFY15, because of higher profit from the water and ports operations in China, offset by lower profit from the engineering services.

Sime Darby said it continues to place itself for future growth by driving results and improving cash flow generation via capital discipline, group-wide productivity improvements and cost reduction measures.

“This includes reduction in cost of palm production and boosting Certified Sustainable Palm Oil (CSPO) oil yields in the plantation division and steering operational excellence through Caterpillar Production Systems and the Business Transformation Project in the industrial division.

“Along with these are the motor division’s expansion of the Inokom vehicle assembly capacity, the property division’s balancing of its property development portfolio between premium and affordable offerings, as well as continued cost improvements for the ports in China, under the logistics division,” it said.

At 2.53 p.m., Sime Darby’s share dipped 37 sen or 4.55% to RM7.77, with 3.57 million shares done, for a market capitalisation of RM51.6 billion. — theedgemarkets.com

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