Highlight Sime Darby 1Q profit plunges 51% yoy to RM489m; revenue falls to RM10.8b

by **Cals** Fri 29 Nov 2013, 18:24

Highlight Sime Darby 1Q profit plunges 51% yoy to RM489m; revenue falls to RM10.8b

Business & Markets 2013

Written by Ho Wah Foon of theedgemalaysia.com

Friday, 29 November 2013 13:50

KUALA LUMPUR (Nov 29): Sime Darby Bhd said net profit for its first quarter to September 2013 had plunged 50.6% to RM488.99 million, from RM990.25 million in similar quarter the previous financial year.

Revenue of the group for the first quarter ended 30 September 2013 was reduced by 8.4% to RM10.76 billion, from RM11.74 billion in the corresponding period of the previous year.

“Profit before tax of the group declined by 44.3% largely due to the lower earnings from all business segments,” said the plantation-based diversified conglomerate in its filing with Bursa.

Elaborating, Sime Darby said in the plantation division, profit declined mainly due to weaker average crude palm oil price and fresh fruit bunches production. Plantation division’s contribution declined by 62.1% compared to the previous year.

Contributions from its industrial division declined by 14.4% to RM327.2 million, largely due to the lower equipment and product support sales to the mining sector as unfavourable commodity prices continue to weaken the Australian mining sector.

The motors division’s earnings declined by 33.9% despite a 0.6% increase in revenue compared to the previous year, due to weaker market sentiments and changes in government legislation in Singapore, slowdown in Australia, Thailand and China, as well as stiff competition faced in China’s luxury car segment.

For the quarter under review, Sime’s property division registered a 12.3% improvement in revenue but earnings dropped 5.8% year on year.

Profit from the energy & utilities segment declined by 2.4% to RM56.8 million compared to the similar period of the previous year due to lower profit from the power sector.

But the port operations in China registered higher profit by 87% attributable to a 23% increase in throughput and higher average tariff rate achieved.

On outlook, Sime Darby said: “The global economic environment remains challenging and uncertain… The business environments in the markets in which the group operates are expected to be difficult as they continue to be affected by volatile commodity prices, weakness in consumer sentiment and the inability to sustain growth.”

“Despite the difficult and challenging market conditions and, barring any unforeseen circumstances, the board is optimistic that the group’s performance for the financial year ending 30 June 2014 will be satisfactory.”

In a separate press statement, Sime Darby announced that for the current financial year ending June 2014, it is setting a target for net profit after tax and non-controlling interests at RM2.8 billion and a return on average shareholders’ funds at 10 percent.

“We will continue to focus on improving operational efficiencies across the group and ensure that the challenges each division is facing are addressed.

“As an immediate measure, the group will continue to institute prudent cost controls, increase focus on efficient working capital management and undertake a disciplined approach towards capital allocation and cash flow management,” said Sime Darby’s president & group chief executive Tan Sri Mohd Bakke Salleh in the press statement.