Minimal impact on Sime from sale of Australia, NZ auto distribution biz

In a filing with Bursa Malaysia yesterday, Sime Darby said SDE had on Feb 5 received a notice from the Dubai International Arbitration Centre (DIAC) that EMAS had submitted a request for arbitration against SDE which was filed on Jan 24, 2016. The amount that EMAS is seeking from the arbitration proceedings is AED41.04mil (about RM46.37mil).

KUALA LUMPUR: Sime Darby Bhd’s plans to sell its PSA brands in Australia And New Zealand will have minimal impact on the conglomerate' earnings, UOB Kay Hian Research says in a report. 

It said on Wednesday the profit before tax (PBT) contribution from Sime’s motor division in Australasia was RM90.1mil in FY16, accounting for 3.1% of group PBT. 

The disposal involves only the distribution business and as such is not expect to have a significant impact on Sime’s earnings, UOB Kay Hian said. 

On Tuesday, Sime Darby Motors reached an agreement to sell its Australia and New Zealand automobile distribution businesses. 

These companies import and distribute the Peugeot, Citroen and DS brands in Australia and New Zealand. However, the disposal value is not disclosed.

The buyers are Inchcape Australia for the Australian business and the Rick Armstrong Motor Group for the New Zealand business. It is expected that, effective June 1 these companies will take over the Australasian distribution for the PSA brands.

Sime’s motor division in Australasia can be separated into the distribution and dealer businesses. 

The rationale for the divestment is that Sime wants to focus on the expansion of its retail car and commercial truck footprints on both sides of the Tasman.

“We are neutral on the disposal as contribution from the distribution business in Australasia is not significant and is unlikely to affect Sime’s future operations. 

“Moreover, we understand that the Australia Peugeot Citroen business faced aggressive competition in the mass-market segment in FY16. The near-term outlook remains weak due to the lacklustre economies in Australia and New Zealand,” UOB Kay Hian Research said in the report.