Translated by Google Translator:
KUALA LUMPUR (May 31): Conglomerate Sime Darby Bhd is confident that it can surpass last year's net profit of RM3.7 billion on improving crude palm oil (CPO) prices and higher contributions from all its divisions.
"We are looking at better contributions from all our businesses for FY12. We are confident that we can exceed last year's net profit of RM3.7 billion," said president and CEO Datuk Mohd Bakke Salleh at a media briefing on Wednesday.
Sime Darby achieved RM3.1 billion in net profit for the first nine months ended March 31, rising 20% from a year earlier.
Bakke said the plantations segment is expected to perform better as CPO prices are expected to remain between RM3,100 and RM3,200 per tonne in the next few months.
"We also expect demand to increase due to the festive seasons such as Deepavali and Ramadan," he said, adding that yields in Indonesia are expected to improve as efforts have been put in place to minimise water stress impact on oil palms.
"Yields in Indonesia had been falling due to laggard effects of El Nino and a prolonged dry spell. However, they have been improving since February," he said.
For 3QFY12 ended March 31, Sime Darby's net profit grew 6.8% to RM876 million from RM820 million previously due to higher contributions from all divisions. Revenue rose 8.8% to RM11 billion from RM10.13 billion while basic earnings per share was 14.58 sen compared with 13.65 sen a year ago.
Sime Darby attributed the growth to higher average CPO price of RM2,881 per tonne against RM2,828 per tonne a year earlier, improved fresh fruit bunch (FFB) production and higher oil extraction rate of 21.8% versus 21.3% a year earlier.
The group also benefited from stronger demand from its mining, logging and construction sector, and achieved higher sales of properties.
For the nine-month period, Sime Darby's net profit grew 20% to RM3.1 billion from RM2.4 billion a year ago, while revenue grew 16.3% to RM33.48 billion. EPS was 50.77 sen versus 39.16 sen.
For the same period, the plantation division's profit before interest and tax (PBIT) grew 20% to RM2.4 billion. This was due mainly to improved FFB and CPO production.
"The higher FFB production of 5.3% in Malaysia helped offset the decline of Indonesia's FFB production of 7%," said group chief financial officer Tong Poh Keow.
While the upstream sector reported growth during the nine-month period, the midstream and downstream segments reported a loss of RM65 million due to negative margins caused by higher feedstock costs, lower demand for refined products in Europe, and higher competition from Indonesia.
Bakke said Sime Darby has been losing customers to Indonesian refiners due to lower export tax on palm products in Indonesia.
"Demand for our palm oil products has been affected. Nevertheless, we are trying to manage our cost in order to improve margins," he said.
Bakke added that Sime Darby is investing around RM300 million to build a refinery with a capacity of 850,000 tonnes per year in south Kalimantan to take advantage of the tax benefit.
On the industrial division, Tong said Sime Darby is expected to benefit from new infrastructure jobs such as the low-cost carrier terminal (LCCT) and My Rapid Transit (MRT). It currently has an order book of RM4.6 billion that would keep the group busy for 20 months.
For the nine-month period, Sime Darby's industrial division's PBIT grew 41% to RM986 million from a year ago.
Property
On its property arm, net profit grew by 50% to RM315 million on higher sales achieved in Bandar Bukit Raja, USJ Heights and Ara Damansara townships.
"While our high-end properties have suffered due to the tighter lending policies, take-up rate in general has been strong at around 80%," said group chief operating officer Datuk Wahab Maskan.
As at March 31, 2012, the property division had unbilled sales of RM1.1 billion.
"We are also looking at building and operating more malls in our existing townships as this would provide recurring income to the group," said Wahab, who is also managing director of Sime Darby Property Bhd.
Earlier this year, Sime Darby Property entered into a 50:50 joint venture with CapitaMalls Asia Ltd to develop a RM500 million shopping mall in Taman Melawati, Ulu Klang, Selangor.
In the last six months, Sime Darby rose 10% to a high of RM10 on March 5. It closed four sen higher to RM9.64 on Wednesday.
This story appeared in The Edge Financial Daily on May 31, 2012.
"We are looking at better contributions from all our businesses for FY12. We are confident that we can exceed last year's net profit of RM3.7 billion," said president and CEO Datuk Mohd Bakke Salleh at a media briefing on Wednesday.
Sime Darby achieved RM3.1 billion in net profit for the first nine months ended March 31, rising 20% from a year earlier.
Bakke said the plantations segment is expected to perform better as CPO prices are expected to remain between RM3,100 and RM3,200 per tonne in the next few months.
"We also expect demand to increase due to the festive seasons such as Deepavali and Ramadan," he said, adding that yields in Indonesia are expected to improve as efforts have been put in place to minimise water stress impact on oil palms.
"Yields in Indonesia had been falling due to laggard effects of El Nino and a prolonged dry spell. However, they have been improving since February," he said.
For 3QFY12 ended March 31, Sime Darby's net profit grew 6.8% to RM876 million from RM820 million previously due to higher contributions from all divisions. Revenue rose 8.8% to RM11 billion from RM10.13 billion while basic earnings per share was 14.58 sen compared with 13.65 sen a year ago.
Sime Darby attributed the growth to higher average CPO price of RM2,881 per tonne against RM2,828 per tonne a year earlier, improved fresh fruit bunch (FFB) production and higher oil extraction rate of 21.8% versus 21.3% a year earlier.
The group also benefited from stronger demand from its mining, logging and construction sector, and achieved higher sales of properties.
For the nine-month period, Sime Darby's net profit grew 20% to RM3.1 billion from RM2.4 billion a year ago, while revenue grew 16.3% to RM33.48 billion. EPS was 50.77 sen versus 39.16 sen.
For the same period, the plantation division's profit before interest and tax (PBIT) grew 20% to RM2.4 billion. This was due mainly to improved FFB and CPO production.
"The higher FFB production of 5.3% in Malaysia helped offset the decline of Indonesia's FFB production of 7%," said group chief financial officer Tong Poh Keow.
While the upstream sector reported growth during the nine-month period, the midstream and downstream segments reported a loss of RM65 million due to negative margins caused by higher feedstock costs, lower demand for refined products in Europe, and higher competition from Indonesia.
Bakke said Sime Darby has been losing customers to Indonesian refiners due to lower export tax on palm products in Indonesia.
"Demand for our palm oil products has been affected. Nevertheless, we are trying to manage our cost in order to improve margins," he said.
Bakke added that Sime Darby is investing around RM300 million to build a refinery with a capacity of 850,000 tonnes per year in south Kalimantan to take advantage of the tax benefit.
On the industrial division, Tong said Sime Darby is expected to benefit from new infrastructure jobs such as the low-cost carrier terminal (LCCT) and My Rapid Transit (MRT). It currently has an order book of RM4.6 billion that would keep the group busy for 20 months.
For the nine-month period, Sime Darby's industrial division's PBIT grew 41% to RM986 million from a year ago.
Property
On its property arm, net profit grew by 50% to RM315 million on higher sales achieved in Bandar Bukit Raja, USJ Heights and Ara Damansara townships.
"While our high-end properties have suffered due to the tighter lending policies, take-up rate in general has been strong at around 80%," said group chief operating officer Datuk Wahab Maskan.
As at March 31, 2012, the property division had unbilled sales of RM1.1 billion.
"We are also looking at building and operating more malls in our existing townships as this would provide recurring income to the group," said Wahab, who is also managing director of Sime Darby Property Bhd.
Earlier this year, Sime Darby Property entered into a 50:50 joint venture with CapitaMalls Asia Ltd to develop a RM500 million shopping mall in Taman Melawati, Ulu Klang, Selangor.
In the last six months, Sime Darby rose 10% to a high of RM10 on March 5. It closed four sen higher to RM9.64 on Wednesday.
This story appeared in The Edge Financial Daily on May 31, 2012.
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