Sime shines but warns of challenges

Kuala Lumpur: Conglomerate Sime Darby Bhd has reported record full-year numbers, driven by its plantation, industrial and auto businesses, but warned of tough times ahead.

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It expects to post satisfactory results for the year to June 30 2012, but further weaknesses in the global economies could affect its performance. "There is still room for further improvement across all business divisions and we will intensify efforts to enhance operational efficiency," president and group chief executive Datuk Mohd Bakke Salleh told reporters and analysts at a briefing here yesterday. In fiscal 2011, Sime, which was dragged by its troublesome energy and utilities unit last year, also rebounded to a record net profit of RM3.7 billion from RM726.8 million before. Revenue hit an all-time high of RM41.8 billion from RM35.2 billion last year. The group declared a final dividend of 22 sen per share, which brings the total dividend to 30 sen a share, three times more than 2010. This was better than what it had expected. Sime had set a net profit target of RM2.5 billion and return on equity (ROE) of 11.5 per cent. Its actual ROE was 16.5 per cent. New key performance indicators will be announced in November. Bakke said all of the group's six business divisions have emerged on a much stronger footing. The plantation division achieved an operating profit of RM3.3 billion, an increase of 56 per cent compared to that of last year. This was on the back of higher crude palm oil prices, which averaged RM2,906 per tonne for 2011, against RM2,311 a tonne in 2010. The industrial division registered its highest ever operating profit of RM1.1 billion. The 41 per cent increase was due mainly to strong sales in Australia/Pacific islands, China and Malaysia, as well as better prices across all regions. The motor division had an exceptionally strong year with a record operating profit of RM633 million, or a 64 per cent increase. This was driven by continued strong and sustained demand across all regions, especially for the new BMW, Hyundai and Ford models that were launched during the financial year. The property division showed a slight decline in operating profit to RM456 million. If not for an impairment provision of RM78 million for overseas properties, the contribution from property development would have been higher than the previous year. The energy and utilities division turned around when it registered an operating profit of RM313 million. This was driven by the stronger performance of the ports and utilities businesses in China, coupled with the RM98.5 million write-back of provisions from the Maersk Oil Qatar project. Meanwhile, on news reports that its chairman Tun Musa Hitam is resigning, Bakke declined to elaborate, only saying: "I don't know about that. He is still our chairman right now."