Sime Darby makes strong start to FY24

PETALING JAYA: Sime Darby Bhd made a strong start to its financial year 2024 (FY24), but will not be resting on its laurels as it remains cognisant of the risks ahead.

The group kicked off FY24 with a first-quarter net profit of RM589mil, which was nearly three times the net profit of RM207mil recorded in the previous-year’s quarter.

Sime Darby’s basic earnings per share rose to 8.6 sen from 3.1 sen in the previous comparative period.

Revenue also picked up over the quarter to RM13.98bil from RM12.18bil in the first quarter of FY23.

Group chief executive officer Datuk Jeffri Salim Davidson said in a statement, “Despite this solid start for FY24, we are most certainly conscious of the risk ahead against the backdrop of a subdued global economic outlook.

“We will continue to rely on our strengths and stay focused on delivering on our Strategy Blueprint.

“Looking forward, we are highly optimistic that the UMW deal will help to broaden our earnings and allow us to capitalise on the mass volume segment, while unlocking further value by leveraging our proven strengths and capabilities in the automotive sector.”

In that regard, Jeffri noted Sime Darby’s shareholders have given their support for the proposal to acquire Permodalan Nasional Bhd’s 61.2% stake in UMW Holdings Bhd.

“This marks a very important milestone in the completion of the deal, which would position us in becoming a leading automotive player in Malaysia,” Jeffri noted.

For the quarter under review, he said the group’s industrial business, in particular, saw very strong growth with a 65.7% jump in profit before interest and tax (PBIT) during the quarter under review.

“This was primarily due to higher demand for product support and the positive contribution from Onsite, a distinguished market leader in providing equipment rental solutions to clients across diverse industries in the Australian market,” he said.

Meanwhile, the motors division turned in a PBIT growth of 15.3% to RM203mil.

This was despite a continued slowdown in China that resulted in lower profit margins at the Chinese mainland operations.

There was also a gain of RM251mil on the disposal of Malaysian Vision Valley land to Sime Darby Property Bhd.

In addition, Jeffri said Sime Darby had successfully completed the acquisition of Cavpower Group, the Caterpillar dealer for South Australia.

“South Australia is home to over 150 mining companies, and we are confident that there are tremendous opportunities for the heavy equipment and rental business.

“This move is in line with our new five-year Strategy Masterplan.

“This is a strategic blueprint that will guide us from FY24 to FY28 and further enable us to capitalise on our strengths and expand our capabilities across our entire value chain,” said Jeffri.

He noted, “Together with our joint-venture partner Ramsay Health Care Ltd, we also recently entered into a sale and purchase agreement with Columbia Asia Healthcare Sdn Bhd on Nov 10, 2023 for the divestment of Ramsay Sime Darby Health Care Sdn Bhd (RSDH) for RM5.68bil, an equity value derived on the back of an enterprise value of RM6.06bil.”

Jeffri said the RSDH sale marks the group’s full exit from the healthcare business, allowing sharper focus on its two core businesses of industrial and motors.

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