PETALING JAYA: Sime Darby Bhd is expecting another challenging period ahead for its financial year ending June 30, 2023, but remains upbeat that it would be able to weather the storm.
In a statement issued together with its results for the first quarter of the financial year 2023 (1Q23), Sime Darby group chief executive Datuk Jeffri Salim Davidson said looking at positive prospects, the group would continue delivering the backlog of orders in Malaysia for its motors division until 3Q23.
“We have also recently secured the distributorship of vehicles from Chinese manufacturer BYD for Malaysia, which promises to bring a lot of excitement to the Malaysian market,” he noted.
Despite the resilient outlook, net profit for the trading conglomerate dropped 12.3% year-on-year (y-o-y) for 1Q23 to RM207mil from RM236mil which the group attributed to weakening consumer sentiment in China that impacted the motors division.
This was partly offset by higher profits from the Malaysian and Australasian operations.
Jeffri said: “Malaysia’s performance for our motors segment was supported by ongoing deliveries for cars ordered during the sales tax holiday, while Australasia’s return to normal operations delivered improved results, compared to the previous corresponding quarter which was impacted by Covid-19 restrictions.” In contrast, revenue for the quarter in review was 14.5% higher y-o-y at RM12.2bil, which Jeffri said was driven by a strong growth of 35% in the group’s industrial business.
He said this was due mainly to higher demand for parts supported by backlogged maintenance work of its customers, and higher prices for parts in Australasia, on top of positive contribution from Salmon Australia, an equipment rental business the group acquired in 2021.
“We also completed the sale of Weifang Port companies in China in early November.
“This marks our full exit from the non-core logistics business and the last big-ticket item of our exercise to rationalise our business portfolio.
“The proceeds from the sale will now be channelled to support the growth of our core businesses of industrial and motors,” he added.
Meanwhile, the financial performance trend was similar quarter-on-quarter (q-o-q), with Sime Darby’s net profit sliding 25.5% off RM278mil from the previous quarter, despite registering a 12.3% q-o-q increase in turnover.
In its current financial year, Jeffri is anticipating the company’s industrial division, particularly the products and services supporting the mining sector, to perform well, underpinned by a backlog of maintenance work and bullish commodity prices supporting continued investment in the resources sector.