Sime Darby's 1H net profit down on year at RM602m, pays 6 sen dividend

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KUALA LUMPUR (Feb 24): Sime Darby Bhd's net profit fell 38% to RM273.29 million in the second quarter ended Dec 31, 2015 (2QFY16) from RM437.4 million a year earlier as oil palm plantation and mining equipment income fell.

In a statement to Bursa Malaysia today, Sime Darby said revenue rose to RM11.83 billion from RM10.74 billion.

For 1HFY16, Sime Darby said net profit dropped to RM601.68 million from RM938.09 million a year earlier. Revenue rose to RM22 billion from RM20.87 billion.

Despite the net profit drop, Sime Darby proposed a dividend of six sen per share for the quarter reviewed, payable on May 6. The ex and entitlement dates fall on April 19 and 21 respectively.

Sime Darby president and group chief executive Tan Sri Mohd Bakke Salle said in a separate statement that Sime Darby's lower profit was due to weak commodity prices, adverse weather conditions and a challenging macroeconomic environment.

During 2QFY16, Mohd Bakke said plantation income fell on lower profit from upstream operations. He said Sime Darby registered lower average crude palm oil price at RM2,066 a tonne versus RM2,123 a year earlier.

"We are halfway through the earnings reporting period and the numbers reflect the challenging business environment that the group operates in.

Lower CPO price realised and fresh fruit bunch (FFB) production during the quarter under review coupled with a significantly more challenging business environment weighed down the earnings contribution of the plantation division.

"The mining sector downturn and slowing growth in China continue to significantly impact the industrial division while consumer-driven businesses remain tested by bearish sentiment," Mohd Bakke said.

Sime Darby is mindful of the challenging operating backdrop's impact on the group's financials.

In the notes accompanying its financials, the group said it expected performance for FY16 "to be lower" compared to the previous financial year.

At 12.30pm today, Sime Darby shares fell 23 sen or 3% to settle at RM7.73 for a market capitalisation of RM48.91 billion. The stock saw 522,800 shares traded.