By Lawrence Yong
Sime Darby Bhd, a diversified Malaysian palm oil producer, said that it was on track to meet its full FY13 profit target of RM3.2 billion despite reporting a 21% drop in net profits for the first nine months.
This would be helped by a rebound in crude palm oil (CPO) prices as plantations business made up nearly two-thirds of its profits.
“Looking at what we have achieved so far… barring any unforeseen circumstances, insya Allah (God willing) we are on target and may even hope for going beyond RM3.2 billion,” Sime Darby’s CEO Mohammad Bakke Salleh told reporters after releasing its 3Q13 financial results.
The company said for January to March 2013 (3Q13), net profit was RM715 million on the back of RM10.844 billion in revenue. This was 23% lower than the same period last year. By segment, only its motor sales, property and healthcare division posted positive earnings in this quarter.
The company received an average CPO realised price of RM2,147 per tonne in 3Q13 compared to RM2,903 per tonne in 3Q12.
Mohd Bakke Salleh
However, the company hopes that CPO prices will start to rebound. “We are looking at RM2,350-RM2,600/tonnes in the next four months … I would not look beyond that,” Mohammad Bakke said. “The move up coincides with Ramadan period when there is a spike in demand… we have already seen that in the last couple of weeks.”
Interestingly, despite reports of lower earnings for its plantations division, the company’s palm oil yield, production, sales and export figures were all positive. Sime Darby said that it exported 6% more palm oil in 3Q13 compared to the previous quarter. The company’s top markets are India, China and Pakistan.
With regards to its investment in Liberia, which was its maiden foray into Africa, Sime Darby said that it was on track with its plans. The company had planted 5,472 hectares with palm oil and cleared 8,088 hectares as of April 30.
The company also reported strong car and property sales in the third quarter. Total car sales volume was up 17% year-on-year (68,092 units) for the first nine months of FY13, with the strongest growth registered in Malaysia, up 27%.
For its property division, the company reported strong sale of a new township outside the Klang valley, Elmina, which was launched this month. It said 252 out of 255 houses were sold in a single weekend, achieving a gross sales value of RM185 million. The township covers a acreage of 5,000 hectares and will be developed over a long period from 2003-2040. It has a gross development value (GDV) of RM20.4 billion.
One of the more exciting developments was its plan to form a partnership with Australia’s Ramsay Healthcare which was announced in March. Both have agreed to combine their six hospitals in Indonesia and Malaysia to operate under a new 50:50 joint venture called Ramsay SimeDarby Healthcare.
Mohammad Bakke said that plans to list the healthcare unit may come later.
“Definitely under the plan that we have formulated as a result of the JV, we would like to double the number of hospitals in five years . By then it will be appropriate to list the healthcare business; otherwise we may still be in the market to mop up a few more hospitals,” he said.
On listing its other divisions, Bakke said that they were still working on the year-and-a-half old plan, which may eventually see all its flagship companies listed separately.
Sime Darby’s shares closed flat at RM9.42 on Friday on Bursa Malaysia.
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