Sime Darby 1Q net profit slips to RM654.74m

KUALA LUMPUR: Sime Darby Bhd has posted a net profit of RM654.74 million for its first quarter ended 30 Sept, 2010, slipping from RM684.64 million a year ago on lower contributions from its plantation, energy and utilities as well as its healthcare and others segments.

The group's revenue rose 13.4% to RM8.78 billion from RM7.73 billion, it announced to Bursa Malaysia on Friday, Nov 26.

Nonetheless, the group saw its industrial and motors divisions perform better this quarter, it said in a statement.

Its property division maintained its performance from a year ago, posting RM59 million in operating profit.

Profit contribution from property rose 35% to RM56 million from RM41 million a year ago but was offset by lower contribution from its asset management and hospitality business as its performance last year was propped by gains from disposal of investment by an associate.

Meanwhile, its motors division more than doubled its operating profit to RM151 million on better sales growth in China, Malaysia, Thailand, Australia and New Zealand.

Its industrial division recorded a 23% growth in operating profit to RM232 million on higher demand for heavy equipment in Australia, Malaysia and China.

In the meantime, its energy and utilities division had returned to the black this quarter with an operating profit of RM33 million on better performance from its power plant in Thailand and its port operations in China.

On the other hand, its plantation division posted 22% lower operating profit of RM492 million on lower production of fresh fruit bunches (FFB) despite higher crude palm oil (CPO) price of RM2,511 per metric tonne realised for the quarter, compared with RM2,245 per metric tonne a year ago.

FFB production, yield and oil extraction rate (OER) suffered from prolonged and unusually heavy rains that affected pollination, harvesting and crop evacuation activities.

In contrast, its oil and gas (O&G) engineering division posted a loss of RM23 million on overhead costs, reducing operating profit by 50% from a year ago.

Basic earnings per share stood at 10.89 sen from 11.39 sen a year ago while net assets per share stood at RM3.52 from RM3.40.

Current acting president and group chief executive Datuk Mohd Bakke Salleh, who will be appointed president and group chief executive with effect from Nov 27, said: "This quarter has been challenging as we have worked with great effort to restore our stakeholders' trust and strengthen performance in all divisions. We are particularly pleased with the strong performances by the industrial and motors divisions and the same can be achieved in all our businesses if we focus on the key levers."

He stressed on the importance of this quarter in not just meeting key performance targets of RM2.5 billion in profit after tax and minority interests and return on average shareholder funds of 11.5%, but also winning back shareholders' trust.

Mohd Bakke added that the group aims to apply a two-tier board structure by January 1, 2011, enabling a "broader and deeper assessment of the Group's main business lines as well as promote greater accountability without unduly compromising business responsiveness".

"We are currently finalising the details, such as the terms of reference and members of the flagship subsidiary boards. Each subsidiary board will consist of members from the main board, senior management and industry professionals who will lend their expertise in their respective fields," said Mohd Bakke.
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