PETALING JAYA: Despite lingering softness in the industrial cycle and volatility in the global automotive market, Sime Darby Bhd
expects its core businesses to remain resilient for the financial year ending June 30, 2026 (FY26).
Group chief executive officer Datuk Jeffri Salim Davidson said the operating environment remained challenging, particularly the mining activities in Australia, but stressed that the recent weakness is cyclical rather than structural.
“We are conscious that the market remains tough. But our team continues to work hard in the trenches, fighting competitors, growing market share, strengthening the balance sheet and managing costs,” he told a press conference yesterday.
This came after the group delivered its best quarterly performance since the 2018 demerger, driven mainly by a strong showing from its motors division, which helped offset headwinds in the industrial segment.
For the second quarter ended Dec 31, 2025 (2Q26), Sime’s revenue rose 7% to RM18.97bil, from RM17.73bil in the previous corresponding quarter, while net profit surged 41.3% to RM431mil from RM305mil.
Profit before interest and tax (PBIT) from continuing operations increased 9.3% to RM767mil, supported by a robust performance from the motors division.
The motors segment recorded a 77.1% jump in PBIT to RM209mil, compared with RM118mil in 2Q25, more than offsetting weaker contributions from the industrial division, whose PBIT fell 11% to RM300mil amid softer mining activity.
The UMW division remained broadly stable, with PBIT easing marginally by 1.1% to RM269mil for the quarter under review.
For the first half ended Dec 31, 2025 (1H26), Sime’s revenue rose 2.8% to RM37.01bil from RM35.99bil in 1H25, while reported net profit declined 28.9% to RM786mil from RM1.11bil previously.
The decline was mainly due to a RM458mil one-off gain from the disposal of Malaysia Vision Valley land recorded in the previous corresponding period.
Excluding this, core net profit rose 15.4% to RM766mil from RM664mil in 1H25, reflecting improved operational performance.
The industrial segment remained the key drag, with 1H26 PBIT declining to RM593mil from RM680mil previously.
The division’s order book stood at RM4.2bil as at end-2Q26, down from RM4.79bil a quarter earlier, largely due to weaker demand in Australasia, where the order book slipped to RM1.9bil from RM2.38bil.
Jeffri said miners in Australia have become more cautious amid softer coal and iron ore prices, higher royalties and elevated operating costs, leading to deferred spending on repairs, maintenance and rebuilds.
However, he stressed that the slowdown is temporary.
“Maintenance activity is unavoidable and is expected to return over the coming quarters. I think this is a temporary blip,” he said.
Jeffri remained bullish on mining fundamentals, citing strong global demand for iron ore, metallurgical coal and copper.
Managing director of Sime’s industrial division Dean Mehmet echoed the view, noting that miners have been preserving cash by deferring maintenance and preparing for their next investment cycle.
The motors division delivered earnings growth, with 1H26 PBIT rising to RM335mil from RM308mil, helping to offset weaker industrial performance.
Singapore and other overseas markets contributed the largest share of segment revenue, although Malaysia accounted for about half of segment profits.
Jeffri said Singapore sales were performing strongly, supported by BYD being the top-selling electric vehicle brand in the country, with BYD and BMW together commanding a combined market share of 31%.
Sime’s motors operation in China also returned to profitability, posting RM58mil in PBIT, compared with a RM10mil loss before interest and tax previously, supported by higher margins, lower overheads and “good rebates” from BMW.
Meanwhile, the UMW division posted a 9.1% increase in 1H26 PBIT to RM530mil from RM486mil previously.
This was mainly due to its manufacturing and engineering sub-segment returning to profitability, recording RM28mil in PBIT versus a RM22mil LBIT a year earlier.
