Business

Friday February 27, 2009

Weak core ops, lower CPO dampen Sime's profit


It chalks up RM278.5mil profit for Q2

KUALA LUMPUR: Lower crude palm oil (CPO) prices and weak performance in its other core divisions dragged down Sime Darby Bhd’s second-quarter net profit by 65.2% to RM278.5mil compared with RM800.02mil a year earlier.

Revenue for the quarter ended Dec 31 eased to RM7.3bil from RM8.1bil before while pre-tax profit shrank to RM395.5mil from RM1.2bil.

The plantation division posted an 86% decrease in profit for the quarter on lower average CPO price realised of RM1,656 per tonne from RM2,962 in the preceding quarter.

For the first half, net profit fell 18.3% to RM1.15bil on lower revenue of RM16bil against RM16.3bil previously.

Pre-tax profit was also down 24% to RM1.65bil from RM2.18bil a year earlier.

An interim dividend of five sen per share has been recommended.

President and group chief executive Datuk Seri Ahmad Zubir Murshid told a press briefing yesterday that the results were within the group’s expectations as “we are operating in a global economic environment that has weakened considerably.”

“The group’s diversified portfolio of business has helped cushion the impact of the downturn, whereby the decline in the performance of the plantation division was offset by the strong performance of the industrial division,” he said.

Zubir expects the second half to be challenging for Sime Darby and as a result, the group has doubled efforts to improve operational efficiency and reduce costs.

He said Sime Darby would also continue to explore opportunities in terms of expanding its land-bank for its plantation operations.

“We expect the third-quarter results to decline, given the average CPO prices are forecast to range from RM1,700 to RM1,800 per tonne. Currently, we are happy to see CPO touching RM2,000,” he added.

On the group’s Vision City project in Negri Sembilan, Zubir reiterated that the project would not be “hurt” by the absence of a low-cost carrier terminal in Labu.

“It doesn’t matter where the airport is. Sepang and Labu are within our development area. That was our original plan, to develop the Sepang estate as an aeropolis,” he added.

He also stressed that Sime Darby had withdrawn its intention to take over the National Heart Institute. “However, it will not stop us from growing our own healthcare business,” he said.


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