Sime Darby wraps FY22 with RM1.1bil net profit

KUALA LUMPUR: Recognising the challenges of supply disruptions and higher operating costs, Sime Darby Bhd is pushing ahead with its non-core rationalisation plan in efforts to be a focused entity with two strong engines in automotive and heavy equipment.

“We believe that our skilled workforce, broad geographical footprint, and the support of the world’s best brands in heavy equipment and automotive will help us to stay on course.

"Sime Darby’s strong financial standing also allows us to take advantage of any opportunities that may come about to strengthen our core businesses and build additional capabilities along the value chain,” said group CEO Datuk Jeffri Salim Davidson in a statement.

Announcing the results of its recently concluded 2022 financial year, the group posted a net profit of RM1.1bil as compared with RM1.43bil in the previous year.

The previous year's performance included a one-off gain of RM272mil on the divestment of the group's stake in Tesco Malaysia.

"Excluding the gain, the group’s net profit declined marginally by 4.3% due to lower profits from the group’s industrial and motors business in China which were impacted by industry-wide contraction in volume for heavy equipment, inventory shortages and Covid-19 restrictions," said Jeffri Salim.

For the year, earnings per share dipped to 16.2 sen compared with 20.9 sen in FY21

Revenue for the year was RM42.5bil as compared with RM44.3bil previously.

In the fourth quarter alone, net profit was almost 32% higher at RM278mil, with increased profits from the industrial division and lower tax expense. Revenue however dipped 4% to RM10.85bil.

The group declared a second interim dividend of 7.5 sen per share for Q4FY22, which brought the full-year payout to 11.5 sen per share.

According to Jeffri Salim, the Malaysian operations of the motors division was a standout performer despite two months of movement restrictions during the year, with a 50% jump in profits from operations due to its BMW and Porsche dealerships as well as its assembly operations.

"The feather in our cap for FY22 was the opening of our assembly plant for Porsche in Kulim, the first outside of Europe, which began delivering locally assembled Porsche Cayennes in March this year.

"The response from customers has been very encouraging,” he added.

Meanwhile, Jeffri Salim said for the industrial division, strong commodity prices drove equipment demand in its key market of Australia, although margins were narrowed by higher overhead costs.

A slowdown in construction activity in China also led to further contraction in the heavy equipment market, he added.

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