PETALING JAYA: Sime Darby Bhd, which posted RM1.43 billion in net profit for the financial year ended June 30, 2021 (FY21), sees the pickup in commodity prices, infrastructure development and excess cash from border closure auguring well for its industrial and motor divisions in FY22.
Nonetheless, group CEO Datuk Jeffri Salim Davidson (pix) acknowledged that the uncertainties from the Covid-19 pandemic remain as the number of active cases is still high.
He noted that thermal coal and oil prices are beginning to move up, which will spur its industrial division as it is linked to mining activities.
“That is going to drive coal mining in our territories in Queensland and demand for our products and after-sales support,” he told the media at a virtual briefing on Sime Darby’s financial results today.
“On car sales, demand will still be there as border closure remains, hence people will have extra money to spend. I think that will also drive some of the growth for us.”
To illustrate the prospects for the coming financial year, the group revealed that its industrial division order book stood at RM3.3 billion as of June 30, 2021.
Group CFO Mustamir Mohamad commented that the division is strongly encouraged by the order book trend in Australia, signifying positive momentum for heavy equipment demand driven by strong commodity prices.
“Besides mining, the order book is further supplemented by the construction sector as the Australian economy is showing healthy signs of recovery backed by the government’s continued efforts in delivering its economic recovery plan,” he said.
Meanwhile, the motor division has rebounded strongly post-pandemic on the back of revenge spending by affluent consumers in China as overseas travel restrictions have redirected some of their spending domestically towards luxury cars.
“Due to strong demand and lower inventory levels, discounting in China has lessened and this contributed to improved margin for our business,” Mustamir explained.
Its Malaysian operations saw higher sales, resulting from the sales and service tax exemption introduced by the government under the Penjana stimulus package.
With regard to mergers and acquisitions, Jeffri said it has plans to undertake such activities but the border closure has thrown a spanner into the works. “There’s nothing out there at the moment, at least in the short term.”
For the fourth quarter ended June 30, 2021, Sime Darby’s net profit rose 19.2% to RM211 million from RM177 million in the corresponding quarter of the previous year on the back of a strong performance from its motor division. Revenue for the quarter jumped 28.6% to RM11.34 billion from RM8.82 billion previously.
For FY21, the group’s net profit stood at RM1.43 billion, a 73.8% improvement over the preceding financial year. Revenue increased 20.4% to RM44.48 billion from RM36.93 billion previously.
The board has declared a second interim dividend of 8 sen per share and a special dividend of 1 sen per share to be paid on Sept 30.