KUALA LUMPUR, May 24 — Sime Darby Bhd’s net profit fell to RM244 million in the third quarter ended March 31, 2022 (Q3 2022) from RM300 million in Q3 2021.
Meanwhile, revenue eased to RM10.57 billion from RM11.02 billion previously, the group said in a filing with Bursa Malaysia today.
It said net profit was lower as the group’s core businesses of industrial and motors were impacted by Covid-19-related disruptions in both China and Australasia, which led to lower contribution from industrial Australasia due to higher operating costs.
Sime Darby said taking into consideration the net one-off gains mainly from disposal of non-core assets recorded in the previous financial year, the group’s financial performance for the financial year ending June 30, 2022 (FY22) is expected to be lower than the previous year.
It said its operations for the three quarters of FY22 were impacted by weakness in the industrial equipment market in China and higher operating expenses in industrial Australasia, as a result of the Covid-19 restrictions.
While the motors division continued to perform well despite the impact of inventory shortages of certain models, the military conflict in Ukraine has adversely impacted the global economic outlook, with rising commodity prices and disruption to the global supply chain.
“The spread of the Covid-19 Omicron variant in China and resultant lockdowns had negatively affected business sentiment, impacting machines and parts delivery and causing deferment in construction projects.
“These factors, as well as the raising of interest rates by central banks to control inflation, have resulted in increased uncertainty in general business sentiment,’’ it said.
The current lockdown is also beginning to affect the motors operations in China.
“Demand for luxury vehicles in other markets, however, remains strong, although availability of certain models will continue to be impacted by supply chain disruptions,’’ Sime Darby noted.
It added that the positive outlook for metallurgical coal prices should lead to increased demand for mining equipment in Australia.
Meanwhile, group chief executive officer Datuk Jeffri Salim Davidson said the group was able to deliver resilient results despite increasingly tough market conditions.
“Motors Malaysia was a standout performer as profits more than tripled from higher vehicle margins and higher profits from assembly operations.
“The reopening of economies and bullish commodity prices should sustain our business in the coming quarters,” he said.— Bernama