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Sime Darby kicks off FY20 on a promising note

KUALA LUMPUR (Nov 26): Sime Darby Bhd’s net profit rose 9.3% to RM246 million for the first financial quarter ended Sept 30, 2019 (1QFY20) from RM225 million a year ago, driven by growth in its industrial division and the motors business.

This resulted in a higher earnings per share of 3.6 sen for 1QFY20 compared with 3.3 sen for 1QFY19.

Revenue for the quarter increased 7.1% to RM9.48 billion from RM8.85 billion a year ago.

Excluding one-off gains, impairments and provisions, Sime Darby's core net profit rose 42.9% to RM270 million from RM189 million in 1QFY19.

“We have reported a good set of results, with our industrial division recording wins in most markets, riding on the mining and construction waves to enjoy increased sales in the China and Australasia region," said Sime Darby group chief executive officer Datuk Jeffri Salim in a statement today. 

"Our motors division too saw significant improvements, particularly in the China market this quarter from higher margins from vehicle sales,” he added. The group's orderbook for the industrial division stood at RM2.5 billion as at Sept 30.

The group said its industrial division posted a higher pre-tax profit of RM260 million versus RM184 million a year ago, amid better contributions from all regions, particularly Australasia, which saw a 34% increase in profit. The 1QFY2019 results had included a restructuring cost of RM15 million for the Malaysian operations.

Meanwhile, the motors division saw a 27.6% year-on-year jump in pre-tax profit for the quarter, on improved margins at BMW China, while higher revenue and margins at the Hong Kong and Macau operations saw profits grow significantly from a low earnings base a year earlier.

The Malaysian operations saw lower pre-tax profit for the quarter as sales in the previous year was exceptionally high due to the tax holiday period, while the Singapore market was impacted by competition, resulting in lower profit year-on-year.

The logistics division reported pre-tax profit of RM6 million for 1QFY20, compared with RM89 million in 1QFY19, which included a gain of RM78 million from the disposal of Weifang Water and a RM9 million profit contribution.

Ramsay Sime Darby Health Care, a 50:50 joint venture with Australia's Ramsay Health Care, maintained its performance during the current quarter, posting pre-tax profit of RM15 million.

“This is a promising start to FY20 given the uncertainties surrounding the global economy and the tough competition, especially in the motors segment. While we are cautiously optimistic of the prospects ahead, we remain focused on integrating our new acquisitions and on executing our strategies,” said Jeffri.

Sime Darby shares traded unchanged at RM2.30 in morning trade, giving a market capitalisation of RM15.64 billion.

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