Sime: RM3.2b profit target within reach

This is written by my colleague Roziana Hamsawi.

KUALA LUMPUR: SIME Darby Bhd, the country’s largest and oldest conglomerate, is expected to match or even exceed its internal net profit target of RM3.2 billion, said president and group chief executive officer Datuk Mohd Bakke Salleh.

“We have, so far, achieved 75 per cent of our current financial year KPI (Key Performance Indicator) net profit target,” he said.

Mohd Bakke said Sime Darby’s internal profit target is RM1 billion lower than what the group had achieved in the financial year ended June 2012. Last year, it registered RM4.2 billion in net profit.

Sime Darby, which last year beat Russian billionaire Roman Abramovich to acquire London’s iconic Battersea Power Station for £400 million (RM1.88 billion), had anticipated the current financial year to a challenging one. Net profit in the current quarter ended March 2013 stood at RM691 million, 21 per cent lower than the RM876 million recorded a year ago.

The figures were posted on the back of RM10.84 billion in revenue, which is one per cent lower than corresponding period last year.

Mohd Bakke said the anticipated lower fullyear profit was due to the challenging conditions of lower crude palm oil (CPO) prices and weaker economy in some of its markets. 

The average CPO price in the three months ended March 2013 was RM2,147 per tonne, 26 per cent lower than RM2,903 in the same period last year. As a result, its plantation division’s pre-tax profit declined to RM413.2 million, a 27 per cent drop year-on-year.

For the nine-month period, its net profit was RM2.39 billion, 22 per cent lower than the RM3.05 billion registered previously. Revenue was RM33.84 billion, two per cent higher than in the previous nine-month period.

The bright spot for the conglomerate came from its motor, property and healthcare divisions, which posted double-digit gains. 

The motor division's pre-tax profit expanded by 18 per cent, helped by strong local and Hong Kong sales, while the property unit's pre-tax profit climbed 15 per cent year-on-year and 100 per cent against the preceding third quarter due to higher sales from new projects.

The healthcare unit also did better in the third quarter with a 28 per cent rise in pre-tax profit.

Mohd Bakke said with the group's recent joint venture with Australia's Ramsay Healthcare, a major expansion in Asia was on the cards. The healthcare business, he said, is planning to double the number of hospitals in five years and a listing will only be considered thereafter.

On the listing of some of its other flagship businesses, Mohd Bakke said the company is working towards that direction, but at this point of time, "it is still too premature to announce anything".