PETALING JAYA: Sime Darby Bhd, which posted a 3.9% rise in its net profit for the second quarter ended Dec 31, 2018 (Q219), expects its FY19 results to be better than FY18 based on the strong results reported in 1H19.
“If you look at the half-year results, they’re already ahead of the game, compared to last year. We have a pretty good chance of being better than last year,” Sime Darby group CEO Datuk Jeffri Salim Davidson (pix) told a press conference after announcing its 1H19 financial results today.
Sime Darby’s net profit for Q219 rose 3.9% to RM317 million from RM305 million a year ago mainly thanks to its motors division with the absence of a loss of RM109 million from the group’s discontinued BMW operations in Vietnam in Q218.
Its revenue was 6.9% higher at RM9.42 million compared with RM8.82 million in the previous year driven by the industrial division.
For the six-month period (1H19), the group’s net profit fell 66.6% to RM542 million from RM1.62 billion a year ago which included profit from its discontinued operations.
For a like-for-like year-on-year comparison, Sime Darby’s continuing operations posted a 69.4% increase in net profit to RM542 million for 1H19, from RM320 million for the same period last financial year, supported by a strong showing in the group’s industrial division.
Its revenue for its continuing operations stood at RM18.27 billion in 1H19, representing a 7.7% increase year-on-year, from RM17.96 billion in 1H18.
The group announced an interim dividend of 2 sen per share for FY19.
Jeffri said Sime Darby’s performance in 1H19 was pretty solid due largely to its industrial division in Australia. Demand for its products and services from the mining and construction sector there have been strong.
“Results (1H19) were strong compared to last year and that strong trend, particularly industrial (division) will continue for the next six months,” he added.
However, it is seeing a slight softening in the group’s motors business, particularly in China and Singapore.
Sime Darby CFO Mustamir Mohamad said there is room for the group to gear up given its current gearing ratio of 21.6% against the optimal level of 60%.
“If we’re targeting to double our profit in the next five years, we have to do some acquisitions. We can’t do it organically,” he said, adding that any acquisitions will be mainly for the industrial division.
He said the group’s focus is in its industrial and motors divisions, where both divisions currently contribute 95% of its profit.
Meanwhile, it is also looking at opportunities to divest its logistics business, but not in a hurry to do so.
