PETALING JAYA: Sime Darby Bhd is eyeing growth through inorganic means in the industrial, motors or healthcare divisions next year.
Group CEO Datuk Jeffri Salim Davidson said the company saw these sort of opportunities present in China.
“I think this is where the growth and profitability is. Growth remains a target for us. We have done two acquisitions last year. In China, if we find a good target and the price is right, then we will go ahead, ” Jeffri said at a briefing.
This strategy for growth follows a slowdown in its industrial division, the company’s second biggest revenue and profit generator.
The industrial division, which was the biggest contributor to profit in the first quarter (Q1) of its financial year ending June 30,2021 (FY21), had been impacted by the ban on Australian coal by China’s government.
According to Sime Darby, the core pre-tax profit for the industrial division, which houses its Australia-based mining operations, had fallen year-on-year (y-o-y) to RM197mil in the first quarter of FY21 due mainly to reduced contribution from Australia on lower mining equipment and parts revenue following the decline in coal prices.
“The issue with coal is after China’s ban on Australian coal. This in turn affects our miners and it affects us. We are not quite sure where this will go in the future, ” Jeffri said.
“The expectation for the second quarter is for our results to soften a little bit, mainly due to the lowering trend of coal prices that will affect the industrial division. We are also closely following the recent China quota restriction on Australian coal. If anything, we believe this will impact our future quarters’ performance, ” group CFO Mustamir Mohamad said.
On reports of a possible listing of its healthcare operations, Jeffri said the company had not made a decision whether or not to list this division. “We are still evaluating and the Covid-19 pandemic had impacted the results here. Whether or not we will list, I think this decision can be made in six to nine months, ” he said.
Sime Darby reported a net profit of RM281mil in its first quarter of FY21, which is a 14.2% increase from the same quarter a year ago due to strong growth in its motors division, particularly in China.
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