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Sime Darby registers record earnings, pre-tax profit up 6%

KUALA LUMPUR: Sime Darby Bhd’s pre-tax profit grew by six per cent to RM5.7 billion for the financial year ended June 30, 2012 compared with RM5.4 billion in the previous financial year. Revenue rose to RM47.602 billion from RM41.858 billion.

"This is an excellent set of results and a record for the Sime Darby Group. It suggests that we are well on track to realise the long-term targets outlined in our five-year strategy blueprint," said its President and Group Chief Executive Datuk Mohd Bakke Salleh in a statement today.

The group registered a record pre-tax profit despite lower profit contribution from the Plantation Division. However, the marginal decline in the Plantation Division’s earnings was more than offset by strong performances in the Industrial and Motors Divisions.

The group’s net profit rose by 13 per cent to RM4.2 billion from RM3.7 billion in the same period last year. The RM4.2 billion net profit surpassed its RM3.3 billion net profit Key Performance Index (KPI) by 27 per cent.

Return on average shareholders’ funds rose to 16.6 per cent against the 13.3 per cent KPI target.
This is the second consecutive year that the group has exceeded its KPI target.

In the financial year under review, the Plantation Division achieved a profit before interest and tax (PBIT) of RM3.2 billion, a moderate decline of three per cent compared to RM3.3 billion in the preceding year.

The Division’s PBIT was lower due to the reduction in fresh fruit bunches (FFBs) production, which had declined by three per cent to 9.8 million metric tonnes, compared to 10.1 million metric tonnes in the same period last year.

In particular, the estates in the Kalimantan region saw a decline in FFB production by 11.4 per cent due to the impact of the prolonged periods of dry spell in 2009 and 2011.

However, on a group basis, the decline in FFBs production was mitigated by higher average crude palm oil (CPO) price realised and the improvement in the oil extraction rate (OER). The division had realised an average CPO price of RM2,925 per metric tonne for the financial year as compared to RM2,906 per metric tonne in the corresponding period last year.

The OER had also improved to 21.8 per cent from 21.4 per cent in the previous financial year. The midstream and downstream segments reported a lower loss of RM62 million compared to a loss of RM75 million. This segment was adversely affected by lower utilisation and tight margins as a result of Indonesia’s new export tax structure.

The Industrial Division had its strongest showing yet with a PBIT of RM1.4 billion compared to RM1.1 billion in the same period last year, an increase of 27 per cent over the preceding financial year. This was mainly attributable to the strong performance of the Australasia, Malaysia and Singapore operations on the back of higher sales of new mining equipment and higher revenue from the parts and services businesses.

This accomplishment includes a maiden contribution from the newly acquired Bucyrus business.
The Motors Division exceeded expectations by recording an 11 per cent growth in PBIT to RM702 million from RM633 million in the same period last year.

This was mainly due to the strong performances from Malaysia and Singapore, which grew by 71 per cent and 26 per cent, respectively.

The excellent results were driven by strong sales growth from all brands. Higher sales contribution from various townships, including Bandar Bukit Raja and Denai Alam, contributed to the Property Division’s improved performance.

PBIT rose by two per cent to RM467 million in FY2011/2012 from RM456 million in the same period last year. Profit contributions from associate companies of RM36 million had also elevated the profitability of the Property Division.

The Energy and Utilities Division registered a PBIT of RM335 million in the period under review, an increase of 36 per cent compared to RM246 million in the previous financial year. The profit improvement was mainly attributable to the recognition of the deferred revenue from the Malaysian power plant and higher contribution from the ports operations in China due to the increased cargo handling throughput at Weifang Port.

The Healthcare Division’s PBIT was maintained at RM26 million as the impact from higher patient volume was moderated by the slower nursing education sector and start-up expenses for the new Ara Damansara hospital.

"These results reflect the meticulous implementation of the key strategic thrusts to ensure that the group has a strong portfolio of winning businesses,” Mohd Bakke said.

"We have also made significant strides towards achieving our strategic growth initiatives. The last financial year witnessed several milestones achieved at the various divisions. The Plantation Division achieved steady growth in new planting in Liberia. The Battersea Power Station project offers an exciting new opportunity for high-growth property development overseas, while Bucyrus continues its
integration into the CAT framework.

"In the Motors Division, we opened four new showrooms and secured new distributorships and dealerships across the region. We also completed the disposal of the oil and gas fabrication yards, thus marking the group’s exit from the oil and gas business.

"We have also strengthened our commitment towards the ports business in China. Finally, the launch of Sime Darby Medical Centre Ara Damansara adds yet another feather in our cap, he said.

Despite the group's strong performance for the year just ended, Mohd Bakke struck a more cautious note for the immediate future. "Notwithstanding the encouraging results, we remain mindful of the
uncertainties in the business environment as we move ahead amidst volatility in the global economy.

"However, given our strong balance sheet position, diverse portfolio of businesses and unrelenting focus on execution and prudent cost management, I am confident that we will be able to withstand these challenges and continue to deliver solid returns," he said.

The group proposed a final dividend of 25 sen per share for the financial year. Together with the earlier interim dividend of 10 sen per share, total dividend for the year is 35 sen per share.

Sime Darby is a Malaysia-based diversified multinational involved in key growth sectors, namely plantations, property, motors, industrial equipment, energy, utilities and healthcare. Sime Darby's shares have been suspended for some announcements. They were last traded at RM9.80. ---Bernama

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