Healthy 6.8% rise in Sime Q3 net profit


  • Business
  • Thursday, 31 May 2012

KUALA LUMPUR: Sime Darby Bhd's third quarter ended March 31 net profit increased 6.8% to RM876mil on the back of a 8.8% increase in revenue to RM11.03bil compared with the previous corresponding period on better results from the plantation, industrial and property divisions. Earnings per share increased to 14.58 sen from 13.65 sen previously.

For the nine-month period, net profit was up 29% to RM3.05bil on a 16.3% increase in revenue to RM33.48bil. Thus, earnings per share improved to 50.77 sen from 39.14 sen.

Sime Darby president and group chief executive Datuk Mohd Bakke Salleh said the company was on track to exceed the group's net profit Key Performance Indicator of RM3.3bil for the full financial year.

For the nine-month period, there was a loss from discontinuing operations of RM66.2mil, which was in relation to the disposal of its oil and gas business which consists of Teluk Ramunia and Pasir Gudang fabrication yards. These yards were sold to Petronas Assets Sdn Bhd and Malaysia Marine and Heavy Engineering Sdn Bhd respectively for a total of RM689.4mil.

“Most of the cost from this disposal has been provided for. We shouldn't be seeing any more in the next quarter,” said Sime Darby group chief financial officer Tong Poh Keow

For the nine months, earnings from plantation rose by 19.2% largely due to higher average crude palm oil (CPO) price realised of RM2,881 per tonne as against RM2,828 in the previous period coupled with higher production of fresh fruit bunches (FFB). Midstream and downstream activities continued to suffer losses of RM65mil for the period.

“If CPO prices could average between RM3,000 and RM3,200 per tonne over the next few months, I would be very happy,” said Bakke.

Meanwhile, CPO production improved by 5% due to the improvement in the oil extraction rate to 21.8% from 21.3%. FFB also rose by 1% to 7.5 million tonnes. Malaysia's FFB yield per mature hectare increased by 7%, partially offsetting the 11% decline in Indonesia's FFB yield per mature hectare due to a shift in crop pattern experienced, particularly in the Kalimantan region. As a result, FFB yield per mature hectare for the group declined by 0.2%.

Segment wise, gross profit from the industrial division increased by 41% to RM985.8mil for the nine-month period, underpined by strong demand in mining, logging and construction sectors in Australasia, Malaysia and Singapore. All regions performed well except for China and Hong Kong which had been impacted by a contraction of the construction sector mainly as a result of local government fiscal policies.

The motor division reported a 4.6% increase in gross profit to RM461.5mil. This lower growth rate was attributable to the weaker demand in Hong Kong and China and a forward contract loss of RM27.5mil against a gain of RM40.9mil a year ago. Other regions registered improved contributions.

Gross profit from the property sector increased by 49.9% to RM314.7mil mainly due to an increase in property development works completed in its townships of USJ Heights, Bandar Bukit Raja and Ara Damansara.

“The overall take-up rate for the quarter has improved to about 80% to 90% from the first half of our financial year. We will be looking to launch our latest township, El Mina, in the first quarter of 2013,” said Sime Darby group COO and managing director of Sime Darby Property Datuk Wahab Maskan.

Maskan added that El Mina would be a township covering some 1,599 acres with a gross development value of RM25bil.

For the nine months, gross profit from the energy and utilities registered a 64% increase in profit to RM280.8mil while the healthcare segment was marginally down by 5.2% to RM18.1mil. Its other businesses recorded a gross profit of RM34.9mil, which is an increase of 188.4%.

Meanwhile, Sime Darby said in a separate filing with Bursa Malaysia that it was reviewing a proposed biogas project following the withdrawal of Mitsui & Co Ltd as a partner.

It had entered into a memorandum of understanding with Tenaga Nasional Bhd (TNB) and Mitsui on April 4, 2011 to conduct a feasibility study on the potential of the project.

“Both TNB and Sime Darby Plantation Sdn Bhd are currently reviewing the terms of the proposed collaboration to move forward with the project,” it said.

In the filing, the firm also said discussions were ongoing between its plantation unit, the Malaysian Government and other participants in the development of the oil palm biomass centre.

“While the (final consortium) agreement is under negotiation, a preliminary study is being conducted to identify where the collaborative research will best support the national biomass initiative,” it said.

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