Higher Q4 earnings for Sime Darby, div 21 sen

KUALA LUMPUR: Sime Darby Bhd's earnings rose 13.7% to RM1.137bil in the fourth quarter ended June 30, 2016 from RM1bil a year ago mainly due to the recognition of an Indonesian special tax incentive. 

The plantations-property group said on Tuesday its revenue fell 8.7% to RM11.72bil from RM12.86bil. It announced a dividend of 21 sen a share. Earnings per share were 19.97 sen compared with 16.14 sen.

For the financial year ended June 30, 2016, its earnings fell 0.8% to RM2.41bil from RM2.43bil. Its revenue rose slightly to RM43.96bil from RM43.73bil.

Sime Darby said the group exceeded its FY2016 net profit key performance indicator (KPI) target of RM2bil by 20%. 

The return on average shareholders’ equity (ROASE) at 7.6% for FY2016 was 1.3 percentage points higher than the ROASE KPI target of 6.3%. 

Sime Darby president and group chief executive Tan Sri Mohd Bakke Salleh said: “Despite the prolonged period of uncertainties created by volatility in commodity prices and the economic situation in our key markets, the group has been able to withstand the challenging market conditions and exceed its KPI targets for the financial year 2016.”

Bakke said the group would continue to focus on driving results and improving cash flow generation via capital discipline, group-wide productivity improvements and cost reduction measures. 

“This includes reduction in cost of palm production and boosting certified sustainable palm oil (CSPO) oil yields in the plantation division and steering operational excellence through Caterpillar production systems and the business transformation project in the industrial division. 

“Along with these are the motor division’s expansion of the Inokom vehicle assembly capacity, the property division’s balancing of its property development portfolio between premium and affordable offerings as well as continued cost improvements for the ports in China under the logistics division,” he said. 

In the fourth quarter, Sime Darby said its plantation division registered a profit before interest and tax (PBIT) of RM499.3mil, up 2% from RM489.4mil a year ago.

Underpinning it was the higher average crude palm oil price realised of RM2,636 per tonne in nQ4, FY16 versus RM2,242 a year ago.

“However, the division’s fresh fruit bunch (FFB) production in Malaysia, Indonesia and Papua New Guinea & Solomon Islands dropped by 29%, 37% and 9% respectively, against the same quarter last year. 

“The same trend could also be seen industry-wide in Malaysia and Indonesia, with double-digit declines for the period under review,” said Sime Darby, pointing out to the main reason being the prolonged dry season, exacerbated by the effects of the Super El-Nino phenomenon especially in Sabah, parts of Peninsular Malaysia and Kalimantan. 

Sime Darby said it plans to accelerate its replanting with high-yielding Genome planting materials.

The industrial fivision’s PBIT in Q4 FY16 rose 3% to RM129mil on-year, boosted by a cost benefit realisation on completion of projects mainly in China and a gain on the sale of a Malaysian property amounting to RM10mil.

Its motors division's PBIT rose 38% to RM197.1mil from RM142.4mil driven by higher profit in all regions except Malaysia and Taiwan.

“Focus will also be given to expanding the Inokom vehicle assembly facility to cater for the domestic and regional markets,” it said.

It property division's PBIT fell 29% to RM293.6mil from RM416.4mil mainly due to a gain on disposal of the 50% equity interest in Sime Darby Sunsuria Development Sdn. Bhd. amounting to RM157.2mil registered in the same period last year. 

However, the decline was partly offset by adjusting the gain on deconsolidation of two subsidiaries in Singapore of RM40.8mil, the gain on disposal of Syarikat Malacca Straits Inn Sdn Bhd of RM39.4mi and the gain on disposal of land in Semenyih of RM184.5mil during the current quarter. 

“Excluding all these gains, the division’s PBIT was lower by 89% due to lower construction progress at Bandar Bukit Raja and deferred launches in other townships. 

“For the full financial year of 2015/2016, the division had launched 22 projects with 1,895 units sold and its unbilled sales stood at RM1.3bil as at June 30, 2016. 

“On the international front, Phase 1 of the Battersea Power Station regeneration project is expected to be completed by March 2017,” it said.

Sime said its energy & utilities division posted PBIT of RM37.4mil versus RM37.3mil a year ago, mainly due to higher profit from the water and ports operations in China offset by lower profit from the engineering services.