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Sime Darby posts RM1.10 bln net profit in FY2022 amid challenging market conditions

18/08/2022 12:14 AM

KUALA LUMPUR, Aug 17 (Bernama) -- Sime Darby Bhd registered a lower net profit of RM1.10 billion for the financial year ended June 30, 2022 (FY2022) versus RM1.43 billion a year earlier which included a one-off gain of RM272 million on the the divestment of the group's stake in Tesco Malaysia.

Excluding the gain, the group's net profit declined marginally by 4.3 per cent due to lower profits from the group's industrial and motors business in China, which were impacted by industry-wide contraction in volume for heavy equipment, inventory shortages and COVID-19 restrictions, the company said in a statement today.

Revenue was lower at RM42.50 billion for the year compared with RM44.30 billion in FY2021.

For the fourth quarter ended June 30, 2022 (Q4 FY2022), net profit was almost 32 per cent higher at RM278 million compared with RM211 million a year ago, due to increased profits from the industrial division and low tax expense, the company said. Revenue was, however, lower at RM10.85 billion versus RM11.30 billion a year earlier.

Its group chief executive officer Datuk Jeffri Salim Davidson said the conglomerate reported over a billion in profits this year in spite of the multiple challenges brought on by a combination of supply chain disruptions and higher operating costs due to labour issues.

Sime Darby declared a second interim dividend of 7.5 sen per share for Q4 FY2022, bringing the total dividend pay-out for FY2022 to 11.5 sen a share, or RM783 million, representing a pay-out of 71 per cent of net profit.

Meanwhile, Jeffri said while the motors division had a tough year, especially in China, Malaysia was a standout performer despite two months of movement restrictions in the financial year, posting more than a 50 per cent rise in profits from operations, thanks to its BMW and Porsche dealerships, and assembly operations.

"The feather in our cap for FY2022 was the opening of our assembly plant for Porsche in Kulim, the first outside of Europe, which began delivering locally assembled Porsche Cayennes in March this year. The response from customers has been very encouraging,” he said.

For the industrial division, the strong commodity prices drove equipment demand in its key market of Australia. However, higher overhead costs ate into margins.

In China, a slowdown in construction activity led to further contraction in the heavy equipment market, he said.

“Nevertheless, we have remained focused on our non-core rationalisation plan. We successfully signed the deal to divest Weifang Port in July which signifies our complete exit from the logistics business," said Jeffri.

Moving forward, Sime Darby will be a focused entity with two strong engines in automotive and heavy equipment.

The company said its skilled workforce, broad geographical footprint, and the support of the world’s best brands in heavy equipment and automotive will help it to stay on course.

Its strong financial standing will also allow the company to take advantage of any opportunities that may come to strengthen its core businesses and build additional capabilities along the value chain.


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