But bad weather may affect plantation and industrial businesses in Q3
KUALA LUMPUR: Sime Darby Bhd posted a 104.8% increase in net profit to RM877.1mil for its second quarter from the same period a year ago with earnings from its plantation, motor and industrial divisions providing much of the lift.
But the company admitted that the recent bad weather in Malaysia and Queensland would affect its plantation and industrial businesses and overall profit growth in the third quarter but not sufficiently to derail its full-year net profit target of RM2.5bil.
“Things will brighten up in the fourth quarter,” president and group chief executive Datuk Mohd Bakke Salleh said at a media conference yesterday.
For the second quarter ended Dec 31, 2010, revenue improved 21.9% to RM10.28bil while net profit jumped to RM877.1mil from RM428.2mil in the previous corresponding period. Earnings per share for the quarter was 14.6 sen compared with 7.13 sen previously. Sime Darby declared an interim dividend of 8 sen a share.
Datuk Mohd Bakke Salleh says things will brighten up in the fourth quarter.For the six months to Dec 31, profit improved 37.7% to RM1.53bil from RM1.11bil previously while revenue improved 17.9% to RM19.1bil from RM16.2bil. Earnings per share rose to 25.49 sen a share from 18.52 sen a share before.
Plantations remained the biggest contributor for the half year with operating profit increasing 5% to RM1.3bil. Bakke said the group was focusing on enhancing operational efficiencies to ensure a swift recovery from the impact of floods.
“From April onwards, we expect production to be higher,'' he said.
Bakke sees the average price of crude palm oil at between RM2,800 and RM3,000 a tonne for the remaining half of the group's financial year ending June 30.
The industrial division saw a 21% increase in operating profit to RM456mil for the first half with business growing in Malaysia, China and Australia. Floods in Queensland, where Sime Darby supplies heavy equipment to the mining sector, will see a drop in business in the third quarter as bad weather prevented it from delivering equipment but Bakke said business there now was looking good.
“Its a matter of catching up what we lost out on earlier,'' he said.
Sime Darby's motor division saw a 87% improvement in operating profit in its first half to RM277mil with strong performance of BMW cars in China, where sales nearly doubled, and Malaysia. The division also benefited from a near 50% jump in sales of Hyundai cars in Malaysia.
Bakke said the property division, which is expected to launch 15 new projects with a gross development value of RM1.6bil in the second half of its fiscal year, saw a 26% decrease in operating profit to RM132mil as the previous period included proceeds from the sale of a subsidiary.
The energy and utilities division reported an operating profit of RM73mil for the first half and priority is to ensure ongoing projects are delivered on schedule.
Bakke said for the oil and gas business, Sime Darby would focus on the engineering, procurement and construction as it had the expertise and capacity in fabrication.
Sime Darby also announced the board members for the individual business divisions after it had previously announced the chairmen of the boards of its subsidiary divisions.
“By having subsidiary boards, anything that needs to be handled by those divisions will handled by those boards,'' said Bakke.
He said since the merger that created the new Sime Darby, the company had supervisory committees to assist the board. Having individual board of directors for its core divisions now would bring the reporting lines back to the old structure of Sime Darby when it had individual boards to oversee each of its listed companies.
Commenting on the latest lawsuit by Emirates International Energy Services, Bakke believes, based on legal advice, Sime Darby has a strong case.
“We are not going to make any provisions (for this lawsuit),'' he said.
Source: Star online, 25 Feb 2011
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