KUALA LUMPUR: Sime Darby Bhd is confident that its businesses in China will be the focal point of its ambitions to unlock value and accelerate growth.
Chairman Tan Sri Samsudin Osman said the group’s low gearing level of 23% armed it with the capacity to pursue growth opportunities, both organic and in the form of mergers and acquisitions.
“We are cognisant of the fact that uncertain times uncover opportunities and we have been aggressive in pursuing strategies that would allow us to accelerate the growth of our core businesses and enlarge our footprint in our key markets. A focal point of our growth ambitions is our businesses in China. China is not only the world’s single biggest luxury car market, it is also the fastest growing,” he said in Sime Darby’s recently released annual report.
Samsudin said Sime Darby’s strategy for China is to aggressively enlarge its network to capture a bigger slice of this market.
“In the near future, we plan to establish a foothold in China’s tier two and tier three cities, where the demand for luxury cars is high and competition is lower.
“On the industrial side, we believe there are great opportunities for construction in China, spurred by the Chinese government’s infrastructure stimulus projects to stimulate the economy.” Apart from China, Samsudin said the group also recognises that other emerging markets such as India and Indonesia have similar demographic potential, adding that Sime Darby will be leveraging its know-how of operating in Asia to explore opportunities there.
“Another area of focus is healthcare, the third pillar of the group. We see exciting growth potential for this business.
“Our hospital assets in Malaysia and Indonesia are poised to benefit from ongoing shifts in structural megatrends such as ageing demographics and increasing demand for quality healthcare with rising affluence.”
For its financial year ended June 30, 2021, Sime Darby reported a 73.8% jump in net profit to RM1.4bil on the back of a 20% increase in revenue to RM44.5bil.
The group attributed the stellar performance of its topline and bottomline to the motors division’s “exceptional performance” in most markets, particularly in China.
Its net profit for the fourth quarter ended June 30 was 19% higher at RM211mil from a year ago, on the back of an almost 29% increase in revenue to RM11.3bil.
Sime Darby declared a second interim dividend of eight sen per share and a special dividend of one sen per share for the fourth quarter ended June 30, 2021. This brings the total dividend payout for 2021 to 15 sen a share, representing a payout of RM1.02bil or more than 70% of net profits.
Group chief executive officer Datuk Jeffri Salim Davidson said the group’s automotive division turned in a record performance during the financial year under review, on the back of a vigorous upsurge in luxury spending in the region.
“The star during the year was our China operations where demand for BMWs and our super luxury marques have been extremely strong. With movement restrictions still in place, many of our customers were unable to travel and were spending their excess cash on luxury items domestically,” he said in the report.