Sime Darby reports lower Q4 net profit of RM177m

PETALING JAYA: Sime Darby Bhd posted a net profit of RM177 million in its fourth quarter ended June 30, 3.8% lower from RM184 million a year ago, mainly due to the adverse effects of the coronavirus outbreak on revenue and profits, as reflected in the motors division, and due to impairment on assets.

Its revenue was down 5.4% to RM8.82 billion from RM9.32 billion in the same quarter last year.

For the full year (FY20), the group’s net profit fell 13.5% to RM820 million from RM948 million previously, mainly due to the recognition of a deferred tax credit of RM129 million arising from the change in real property gains tax rates in Malaysia in the previous financial year.

The group saw a 9.5% growth in net profit from underlying business operations (core net profit) of RM1.04 billion for FY20, compared with RM950 million for the last financial year, as strong performance in the group’s industrial division in Australia and China, and robust BMW sales performance in its motors divisions’ operations in China in the first half of FY20, helped mitigate the impact of the coronavirus outbreak and of the impairments made.

Revenue for the group in FY20 was largely maintained at RM36.93 billion, compared with RM36.16 billion in FY2019.

Sime Darby group CEO Datuk Jeffri Salim Davidson said the group had a solid first half with both the industrial and motors divisions reporting strong results.

“The movement restrictions from February to May severely disrupted our operations in the second half of the year but, fortunately, our businesses have seen a strong recovery in sales after movement restrictions were eased.

“The diversity of our operations, both in terms of the different market segments we serve and in terms of geography, worked to our advantage. Our Caterpillar distribution business in Australia performed particularly strongly and covered for the shortfall in other parts of the business affected by lockdowns,” he said in a statement.

He added that the resilient operating performance together with its efforts to improve working capital has resulted in a significant increase in the group’s operating cash flow from RM1.35 billion last year to RM3 billion this year.

“The strong operating cash flow and relatively low gearing ratio of 0.26 times places the group in a good position to handle the uncertain times ahead.”

The group made impairments of over RM200 million for the year mainly from Weifang Port Services Co, and its investment in Eastern & Oriental Bhd.

A second interim dividend of 7 sen per share and special dividend of 1 sen per share was declared for FY20. Together with the earlier interim dividend of 2 sen per share, the total dividend for the year is 10 sen per share.

source https://www.thesundaily.my/business/sime-darby-reports-lower-q4-net-profit-of-rm177m-BG3697003