Sime Darby earnings impacted by China industrial slowdown in Q1FY22

KUALA LUMPUR: Sime Darby Bhd's net profit for the first quarter of its financial year ending June 30, 2022, dipped 16.01% to RM236mil from RM281mil in the previous corresponding quarter due to the impact of a slowdown in China's construction activities on its industrial division.

Revenue in the quarter was 1.9% lower at RM10.67bil, compared with RM10.88bil in the same quarter in 2020.

Earnings per share dipped to 3.5 sen compared to 4.1 sen in 1QFY21.

"China is a big part of the Group’s revenue and profits, and the Industrial division was impacted by the slowdown in infrastructure spend in China.

"Our Motors’ operations in China on the other hand, continued to deliver a strong set of results with higher sales of super-luxury vehicles," said Sime Darby group CEO Datuk Jeffri Salim Davison in a statement released in conjunction with the earnings report.

He added that the industrial and motor operations in all the other markets performed well considering that many were under some form of movement restriction during the first two months of the quarter.

"We are conscious of the economic and pandemic related headwinds that could impact our performance in our markets across the Asia Pacific region.

"Nevertheless, we remain positive on long-term prospects in the region, given that we have built strong fundamentals and fired up our businesses to remain resilient and well-positioned to capitalise on growth opportunities,” he said.

Meanwhile, Jeffri also announced the completion of the acquisition of Australia's Salmon Earthmoving Holdings in October.

The purchase is expected to contribute between RM150mil and RM180mil to the groups' revenue in FY22 and ensure its diversification into the construction rental sector and into a new market in Australia.

By division, the industrial division's profit before interest and tax (PBIT)in Q1FY22 was down 18.4% y-o-y to RM160mil.

The motors division's PBIT improved slightly in the quarter as Motors China, excluding Hong Kong and Macau, reported a 15% higher PBIT y-o-y on higher revenue from the sales of super luxury vehicles and higher profits in Malaysia.
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