KUALA LUMPUR, Nov 21 ― Despite posting a lower net profit for the first quarter (Q1) ended Sept 30, 2018, Sime Darby Bhd remains confident of registering satisfactory results for the whole financial year, driven by its main divisions ― motors and industrial.
Group Chief Executive Officer Datuk Jeffri Salim Davidson said the drop in net profit to RM225.0 million from RM1.32 billion in the previous year's corresponding quarter was due to the demerger exercise completed in November last year, whereby Sime Darby Plantation Bhd and Sime Darby Property Bhd were deconsolidated from Sime Darby Bhd.
Sime Darby Bhd now focuses on motors, industrial, logistics and healthcare businesses. Excluding the discontinued operations, profit attributable to its shareholders in Q1 fell 9.3 per cent year-on-year, the company said in its quarterly financial report to Bursa Malaysia.
In a group media briefing here today, Jeffri said Sime Darby expected both the motors and industrial divisions to perform well and contribute handsomely.
It has put aside RM940 million as capital expenditure for these divisions, part of which will be used for showrooms and branches.
During his presentation, Jeffri said the group expected to continue the strong momentum and higher sales for the motor division.
Sime Darby recorded a higher vehicle sales volume in China and Malaysia, but the motors division's profit before interest and tax fell slightly to RM105 million against RM112 million a year earlier due to lower margins in the republic as a result of competitive discounting.
He also did not discount the global trade tensions causing stringent hire purchase approvals that impacted vehicle sales. However, he expressed hope of countering the situation through upcoming model launches, which were expected to boost sales in the second quarter.
As for the industrial division outlook, Sime Darby expects it to be positive with a strong order book, mainly from the mining industry in Australasia.
“Currently our order book stood at RM2.6 billion as at Sept 30, 2018, compared with RM2.4 billion for the same period in 2017.
“The favourable commodity price levels will drive miners to increase capital expenditures for both equipment replacement cycles and expansions,” Jeffri explained.
As for the projects in Malaysia under the division, he noted there were some deferments of major projects due to the rationalisation of government spending; however, the ongoing West Coast Expressway and Pan Borneo Highway projects would proceed as planned.
“We will also be focusing on rural infrastructure, airports and affordable housing in line with the 11th Malaysia Plan,” he added. ― Bernama
