KUALA LUMPUR (Aug 27): Sime Darby Bhd group chief executive officer Datuk Jeffri Salim Davidson said the group is currently looking for another merger and acquisition opportunity in China, as economic prospects take a turn for the better.
“Looking at our current gearing level of 0.26 times, we do still have space to gear up to do another acquisition. We are looking at various opportunities in China, one of which could be in the motor space,” he told a press briefing, following the release of the group’s financial results for the year 2020.
Although its motor division was impacted during the year by movement restrictions in Malaysia, Singapore and New Zealand, its China operations showed a strong rebound during the fourth quarter, Jeffri said.
He added that robust BMW sales performance in the first half of the financial year 2020 also helped mitigate the impact of the coronavirus outbreak on the full year's performance.
As for its industrial division, Jeffri said the Australia operations were mostly spared from the negative impact of the coronavirus outbreak, while its China operations made a strong recovery in the fourth quarter.
“The market was not expecting such a strong performance. That’s the thing about our diverse operations, we operate in many countries so when one is down, the other is up. We have been very lucky. Malaysia has been down a bit, but Australia and China have been doing well,” he noted.
Jeffri added that the stimulus measures announced by the Chinese government to boost spending on infrastructure will also bode well for Sime Darby’s industrial division, moving forward.
“Our focus ahead is to continue managing costs and our returns. We also have some non-core assets which we will continue to look at divesting,” Jeffri said.
Earlier today, the group announced that its net profit dipped 3.8% to RM177 million for the fourth quarter ended June 30, 2020 (4QFY20) from RM184 million a year ago, as revenue declined 5.4% to RM8.82 billion from RM9.32 billion.
For the full year ended June 30, the group's net profit was down 13.5% y-o-y to RM820 million, from RM948 million previously, despite revenue increasing 2.2% to RM36.93 billion from RM36.16 billion. The annual profit decline was 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 declared a special one sen dividend and a seven sen second interim dividend for FY20 — a total of eight sen per share — to be paid on Oct 30. This brings its full year payout to 10 sen per share, the same quantum as the year before.
Sime Darby shares settled one sen or 0.46% higher at RM2.19 today, for a market capitalisation of RM14.9 billion.
Edited by Tan Choe Choe