Sime Darby 2Q net profit doubles to RM877.1m, plans property projects with RM1.6b GDV

KUALA LUMPUR: Sime Darby Bhd’s earnings surged 104.8% to RM877.06 million in the second quarter ended Dec 31, 2010 from RM428.19 million a year ago, boosted by most of its divisions while for the year ahead, it planned property projects with gross development value of RM1.6 billion.

Announcing the strong set of financial results on Thursday, Feb 24, Sime said its revenue rose 21.9% to RM10.28 billion from RM8.43 billion.

Earnings per share were 14.6 sen compared with 7.13 sen a year ago. It declared an interim dividend of eight sen per share.

For the first half, its earnings rose 37.7% to RM1.53 billion from RM1.113 billion in the previous corresponding period. Revenue was 17.9% higher at RM19.06 billion compared with RM16.17 billion.

On the 1H performance, it said the group’s stronger overall performance was underscored by the improved performance of the plantation, motors, industrial and energy & utilities divisions, all
of which performed better than the previous corresponding period.

“The improved performance was achieved despite the plantation division, the biggest contributor to the group’s profits, experiencing prolonged rainfall and floods in Malaysia and Indonesia that had
affected operations. However, the higher CPO price during the period under review had more than offset the impact of the decline in production,” it said.

Performances of divisions in 1H ended Dec 31, 2010.

The plantation division posted an operating profit of RM1.3, up 5% on-year driven by higher crude palm oil (CPO) price. For the half-year period, it achieved an average CPO price of RM2,692 per tonne compared with RM2,222 a year ago.

The industrial division generated an operating profit of RM456 million for the first half, up 21% due to the stronger performance in Malaysia and China as a result of increasing demand boosted by higher growth in the construction and infrastructure industries.

The motors division recorded an 87% increase in operating profit to RM277 million, underpinned by strong sales growth in China and Malaysia.

BMW remained the biggest profit contributor and was the top selling luxury marque in Singapore, Hong Kong and Macau for 2010 where the Group is the sole distributor of BMW vehicles.

In Malaysia, profit growth was attributable mainly to the strong performance of Hyundai.

However, the property division’s operating profit fell 26% to RM132 million as the contributions from the asset management and hospitality segments were lower.

Nonetheless, the property development segment’s profit rose 9.4% to RM121 million.

Sime Darby’s energy & utilities division reported an operating profit of RM73 million.

Sime Darby president and group chief executive, Datuk Mohd Bakke Salleh said the group had a commendable first half considering the weather disruptions experienced in the Malaysian and Indonesian
plantations.

On the performance of the property Division, Mohd Bakke said the group is targeting to launch 15 new projects across several townships in the second half of FY2010/2011.

“The division is expecting an estimated gross development value (GDV) of about RM1.6 billion from the launches,” he said.

As for the industrial division, he said the financial impact of the recent floods in Queensland, Australia would be reflected in the third quarter results of FY2010/2011.

However, he expected the Industrial division’s performance for the full financial year “will not be severely affected and that the recovery would only be visible by the fourth quarter of this financial
year”.

Higher demand for equipment rental for repair and maintenance works as well as income from the after-sales business post-flooding will cushion the impact of the delays in equipment deliveries.