PETALING JAYA: Sime Darby Bhd
expects its diversified portfolio will continue to show its resilience as geopolitical and trade tensions keep business conditions subdued.
The conglomerate noted its UMW division could stand out amid headwinds in some regional markets as it announced its first quarter results of financial year 2026 (1Q26).
The group posted a net profit of RM355.5mil or earnings per share (EPS) of 5.2 sen as revenue amounted to RM18bil, down marginally from RM18.26bil it booked for the same period last year.
Sime Darby’s earnings were 56% lower year-on-year (y-o-y) but that was primarily due to the fact that the RM800mil in earnings posted in 1Q25 included a one-off gain from the disposal of land in the Malaysia Vision Valley (MVV) project in Negri Sembilan.
“Market conditions remain tough, but our core businesses have continued to show resilience, particularly UMW, which continues to deliver strong results.
“This is reflected by our overall core earnings which remained broadly consistent y-o-y, from RM359mil in 1Q25 to RM335mil in 1Q26.
“The group’s diversified portfolio continues to demonstrate its strength,” said Sime Darby group chief executive officer Datuk Jeffri Salim Davidson,
He added while some of its markets faced headwinds, positive momentum in areas such as electric vehicles (EV) sales and data centre-driven projects helped offset these challenges.
“As we move forward, we are focused on operational discipline, cost management and delivering value for our stakeholders.
“The fundamentals of our businesses remain sound, and we are well-positioned for this financial year,” he said in a statement after the release of its financial results.
The UMW division stood out in the period, delivering a higher pre-tax profit of RM261mil, an increase of 22% y-o-y, supported by steady demand in its automotive business.
Sime Dardy’s motors division, which operates the group’s international automotive business, reported a pre-tax profit of RM126mil in the quarter, a decrease of 33.7% compared to the same period last year.
Sime Darby attributed the drop to weaker assembly performance in Malaysia, and softer commercial vehicle revenue and margins in Australasia that has impacted results. On the other hand, improved margins in Hong Kong, Macau and Taiwan boosted earnings.
Going forward, the motor division performance will likely be anchored by UMW.
“The motors sector continues to be impacted by slower consumer demand and heightened competition.
“Nevertheless, sales in the affordable vehicle segment in Malaysia remains resilient,” the company stated in a filing with Bursa Malaysia.
Sime Darby’s industrial division recorded a pre-tax profit of RM293mil in 1Q26, down 14.6% y-o-y, due to lower equipment sales in Australasia as a result of a shift in timing for mining and construction equipment deliveries. The division was also impacted by lower translated pre-tax profit due to the stronger ringgit against the Australian dollar.
Sime Darby added the industrial division’s performance was supported by data centre projects in Malaysia, which drove strong engine sales.
The China market also recorded higher revenue on the back of increased engine sales.
“For the industrial sector, the medium-to long-term demand from the Australian mining industry for the group’s equipment and after-sales service is expected to remain strong,” the conglomerate added.
Sime Darby’s industrial segment, which accounted for 41% of FY25 core pre-tax profit, in Australasia remains the group’s anchor earnings driver, but the outlook stays cautious according to Affin Hwang Investment Bank.
In a report in mid-November, the research house stated softer Australian met-coal output and possible US policy shifts under President Donald Trump were headwinds it has to deal with.
Affin Hwang noted Trump’s pro-coal stance and unpredictable tariffs could reshape global supply–demand dynamics and introduce downside risks to Sime Darby’s Australasian operations given their reliance on Caterpillar’s mining equipment supply chain.
The shifts may increase cost pressures on US-sourced equipment if trade disruptions occur and soften machinery order books as US coal competes for global market share.
Australia’s supply outlook appears constrained, with only three confirmed new metallurgical coal mines expected to commence operations before 2030 as reported by Discovery Alert.
“This limited project pipeline, coupled with several existing mines approaching the end of their planned production lifespans, points to a potential supply gap emerging over the near-to-medium-term.
“This trend is also relevant for Sime Darby, given its industrial’s revenue is largely weighted toward met coal which accounted for 17% of its commodity exposure portfolio.
“Prolonged weakness in met coal demand therefore represents a meaningful risk to its industrial earnings trajectory,” Affin Hwang warned.
