Sime Darby Bhd delivers another strong quarter, with a higher net profit of RM589 million for the group’s first quarter ended 30 September 2023 (Q1 FY2024), but remains cognisant of the challenging 2024 ahead.
In a statement, it said that this is primarily driven by its effective business strategy, which saw the Industrial division significantly rebound in the quarter under review, compared to the same quarter last year.
“The group’s revenue for Q1 FY2024 was 14.8 per cent higher at RM13.98 billion, compared with RM12.18 billion in Q1 FY2023,” it said.
Its group chief executive officer Datuk Jeffri Salim Davidson said despite a solid start for FY2024, it is most certainly conscious of the risk ahead against the backdrop of a subdued global economic outlook.
“We will continue to rely on our strengths and stay focused on delivering on our strategy blueprint,” he said.
Meanwhile, the group reported a profit before interest and tax (PBIT) for the Industrial division saw an upturn of 65.7 per cent to RM358 million in the current quarter.
“This is mainly due to an increase in profits from the division’s Australasia operations from RM186 million to RM309 million. The increase was largely due to higher product support revenue and profit contribution from Onsite Rental Group (Onsite), which the group had acquired in April 2023,” it said.
Overall, PBIT for the Motors division increased by 15.3 per cent to RM203 million despite a continued slowdown in China, resulted in lower profit margin in the operations there.
“The division’s positive performance was attributable to the Malaysian operations which did well, up by 80 per cent in PBIT,” it said.
Also included in the results was a gain of RM251 million on the disposal of MVV land to Sime Darby Property Berhad.
Jeffri said despite unprecedented geopolitical tensions and exceptionally trying economic conditions, the group is pleased to have kicked off FY2024 on a positive note.
“The Industrial business saw a significant 65.7 per cent jump in the first quarter. This was primarily due to higher demand for product support and the positive contribution from Onsite, a market leader in equipment rental solutions,” he said.
He also highlighted that the group had completed the acquisition of Cavpower Group, the Caterpillar dealer for South Australia, which is a home to over 150 mining companies.
“We are confident that there are tremendous opportunities for the heavy equipment and rental business. This move is in line with our new 5-year Strategy Masterplan (from FY2024 to FY2028) and will further enable us to capitalise on our strengths and expand capabilities across our entire value chain,” he said.
The group has also together with its joint venture partner Ramsay Health Care Limited, entered into a sale and purchase agreement (SPA) with Columbia Asia Healthcare Sdn Bhd on 10 November 2023, for the divestment of Ramsay Sime Darby Health Care Sdn Bhd (RSDH) for RM5.68 billion, an equity value derived on the back of an enterprise value of RM6.06 billion.
“The RSDH sale marks our full exit from the healthcare business, allowing sharper focus on our two core businesses, Industrial and Motors.”
Jeffri added the group’s shareholders have given it their support for our proposal to acquire Permodalan Nasional Berhad’s 61.2% stake in UMW Holdings Berhad.
“Looking forward, we are highly optimistic that that the UMW deal will help to broaden our earnings and allow us to capitalise on the mass volume segment, while unlocking further value by leveraging our proven strengths and capabilities in the automotive sector,” it said.
“This marks a very important milestone in the completion of the deal, which would position us in becoming a leading automotive player in Malaysia.”
