Sime Darby 4Q net profit slumps 53.4% to RM571 mil on impairments

KUALA LUMPUR (Aug 25): Sime Darby Bhd reported a 53.4% slump in net profit for its fourth financial quarter ended June 30, 2017 (4QFY17) to RM571 million or 8.4 sen per share, from RM1.22 billion or 19.4 sen per share in 4QFY16, due to RM605 million in impairments and provisions across its divisions.

In a statement filed with Bursa Malaysia today, Sime Darby shared its industrial division took an impairment of its Bucyrus distribution rights of RM214 million due to the downturn in the Australian mining sector and made a further provision of RM43 million for onerous contracts on the lease of Bucyrus equipment.

The plantation division had also made an impairment of RM202 million in 4QFY17 in respect of its Liberia operations, and an impairment of RM39 million was made for Emery Oleochemicals in which it has a 50% stake.

Against a backdrop of soft property market conditions, its property division made a RM70 million provision for inventories in 4QFY17, while its motors division recorded a goodwill impairment of RM19 million in Vietnam.

Revenue for 4QFY17 came in 6.1% higher at RM8.2 billion, from RM7.7 billion in 4QFY16.

The group proposed a final dividend of 17 sen per share, bringing its total dividend for the year to 23 sen per share. The entitlement and payment date for the final dividend will be announced later.

For its full financial year ended June 30, 2017 (FY17), Sime Darby reported a net profit of RM2.44 billion or 36.7 sen per share, from RM2.42 billion or 38.6 sen per share a year ago. 

Its full year net profit surpassed its FY17 target net profit of RM2.2 billion by 11%. Its full year impairments for FY17 had accumulated to RM684 million.

Revenue for FY17 was 5.5% higher at RM31.09 billion, from RM29.45 billion a year ago.

“I am pleased to report that we have managed to beat our KPI targets, despite an uncertain operating landscape and impairments of almost RM700 million.

“Our underlying earnings is evidence of our strength and resilience,” said Sime Darby President and Group Chief Executive, Tan Sri Mohd Bakke Salleh.

He added that the group’s results were boosted by performance of both its plantation and the motors divisions.

“The plantation division enjoyed the fruits of 2 higher average crude palm oil (CPO) price and increased fresh fruit bunches (FFB) production, while the motors division’s Malaysia and China operations were the main drivers behind its strong performance,” Bakke said.

At the close of noon market, Sime Darby shares were down 5 sen or 0.54% to RM9.18, with 509,100 shares exchanging hands. — theedgemarkets.com

For more stories, download TheEdgeProperty.com pullout here for free.