KUALA LUMPUR (May 25): Sime Darby Bhd said today third quarter net profit more than doubled to RM300 million from RM115 million a year earlier, underpinned by the strong performance of the diversified entity’s car dealership business as the group contended with the impact of the Covid-19 pandemic and global trade tension.
In a statement to Bursa Malaysia today, Sime Darby said revenue rose to RM11.02 billion in the third quarter ended March 31, 2021 (3QFY21) from RM8.43 billion.
Sime Darby undertakes its car dealership business under the group’s motors division.
"The [motors] division recorded an increase in profit of 142.7% to RM250 million in the current quarter, mainly due to the strong performance of the Greater China region, where PBIT (profit before interest and tax) more than tripled from RM37 million to RM125 million with higher revenue and margins.
"The Greater China operations were adversely impacted by the Covid-19 outbreak in the previous corresponding period. PBIT for Australasia also more than tripled from RM15 million to RM54 million, with higher revenue and operating margins. The Singapore operations registered higher PBIT mainly due to a goods and services tax refund of RM39 million in the current quarter,” Sime Darby said.
Sime Darby, which distributes heavy equipment under its industrial division, is also involved in logistics and healthcare operations.
For 9MFY21, Sime Darby said group net profit surged to RM1.21 billion from RM643 million a year earlier while revenue climbed to RM33.14 billion from RM28.11 billion.
The group did not declare any dividend for 3QFY21.
Looking ahead, Sime Darby said that while many economies expect to register stronger growth in 2021, there are still significant uncertainties arising from the ongoing Covid-19 pandemic besides the China-Australia trade tension.
Sime Darby said the pace of Covid-19 vaccinations is globally uneven while new virus strains continue to fuel outbreaks in various locations. In terms of trade tension, the relationship between China and Australia has yet to show signs of improvement, Sime Darby said.
"The rebound in motor vehicle sales has generally been strong in most countries, especially in China. However, the motors division is experiencing supply shortages for certain new models, partly due to semiconductor chip shortages. This is expected to improve in the coming months.
"Fiscal stimulus measures to support growth in countries such as China are expected to continue supporting equipment sales for the industrial division. However, strong competition and changes in product mix would unfavourably impact margins. In addition, China’s import restrictions on some Australian exports such as coal may adversely impact equipment sales in Australia.
"The group’s net profit for the nine months ended March 31, 2021 (9MFY21) has exceeded the net profit achieved in the financial year ended June 30, 2020 (FY20). Barring any unforeseen circumstances, the board is cautiously optimistic that the group would register a strong set of results in the last quarter of the current financial year,” Sime Darby said.
In a separate press statement attached to Sime Darby’s Bursa filing today, Sime Darby group chief executive officer Datuk Jeffri Salim Davidson said the group’s motors division continued to perform well in 3QFY21 on the back of sustained strong demand for luxury cars, especially in the key markets of China and Australasia.
"Restrictions on international travel have diverted domestic spending to premium and luxury brands, which have benefitted us. On the other hand, we saw a softening in demand for equipment and parts in our industrial division’s operations in Australia,” Jeffri said.
At 2:52pm today, Sime Darby’s share price rose one sen or 0.45% to RM2.21, which values the group at about RM15.03 billion.
Sime Darby has 6.8 billion issued shares, according to its latest quarterly financial report.