Sime eyes RM3.2b net profit

KUALA LUMPUR: Sime Darby's net profit for the three months ended December 2012 fell 36 per cent to RM708.5 million from RM1.1 billion, a year earlier. This was the group's third consecutive quarter of declining profits.

Despite the unencouraging performance, president and group chief executive Mohd Bakke Salleh said he is hopeful of achieving a RM3.2 billion net profit for the year ending June 2013. 

He also  assured shareholders that the group is able to go on dishing out at least half of its profit to shareholders, as palm oil prices stabilise and are starting to stage a recovery.

Yesterday, the third-month benchmark palm oil futures on Bursa Malaysia Derivatives dropped RM9 to close at RM2,410 per tonne.

When asked for a forecast, Bakke said he is optimistic that "palm oil prices will average at between RM2,700 and RM2,800" because global demand for the staple food ingredient still outstrips supply.

"In the first half of our financial year, plantations contributed almost half to our total profits. 

"The gap between palm oil and soyaoil has widened to US$320 tonne, so the current attractive prices could give an incentive for consumers in India, China and Pakistan to make the switch. 

"As prices is set to improve in the second half, we hope to do better," he said at a briefing here yesterday.

Also present were group chief operating officer Datuk Abdul Wahab Maskan and group chief financial officer Tong Poh Keow. 

"We are confident of riding out of the current challenging environment and reaping the benefits in the future when the global economy gets on the recovery path," Bakke added.

Sime Darby proposed paying a lower interim dividend of 7 sen a share from 10 sen, previously. Asked if this means lower dividends for shareholders for the full year, Bakke said: "It may seem lower but I assure you we're maintaining a dividend payout of at least half of our profits."

The group's property division suffered a 54 per cent decline in its second-quarter profit due to lower recognition from two mature townships in Klang Valley. Bakke, however, said the division's take-up rate will pick up in the coming quarters. 

"The launch of the Saffron Hills housing in Denai Alam, Selangor, has managed to garner a 92 per cent take-up rate to date, while the Battersea Power Station project in London has already sold 97 per cent of the first phase of its property offerings," he said.

The first phase of the Battersea project will start construction in June, while the second phase will be launched towards year-end.

Sime Darby's industrial division profit dipped 4.0 per cent to RM285 million, due to lower deliveries of heavy machineries to the oil and gas, marine and power generation sectors.

Profit from its motor division for the second quarter went up 7.0 per cent to RM164.6 million, thanks to overall strong sales of BMW, Peugeot and Hyundai models.

The group's search for a foreign partner to grow its healthcare business into that of a regional player is still "work in progress", said Bakke.