KUALA LUMPUR: Sime Darby Bhd has beaten its key performance indicator (KPI) target by 11 per cent as net profit rises to RM2.44 billion in the year ended June 30 2017, from the targeted RM2.2 billion.
The net profit could be higher if not for a full-year impairment of RM684 million, including RM605 million set aside in the fourth quarter.
The RM605 million impairment pushed Sime Darby’s net profit 53.4 per cent lower to RM571 million in the quarter under review, from RM1.23 billion net profit a year ago.
The group’s fourth quarter revenue edged up 6.1 per cent to RM8.20 billion from RM7.73 billion.
“We've decided to book in close to RM700 million impairment into the close of the financial year. It is a prudent step in preparation for the split of our plantation and property businesses into separate entities,” president and group chief executive Tan Sri Mohd Bakke Salleh said at a briefing on the results yesterday.
“It is the not the first time we have carried out impairment exercises but it is the biggest we have undertaken. Now that it is done, we can now look forward. This financial year we will see the start of pure plays, with a bang! Hopefully, we would see the plantation and property businesses separately listed on Bursa Malaysia by this November,” Bakke added.
Asked if he had felt demoted as the Sime Darby group splits into three and he would just be in-charge of the plantation business, Bakke said: “I don’t think there's a need to perceive Mohd Bakke as a central figure in this scheme of things.
“I’m already in the six series and past the retirement age. I have decided to stay on to see through this transition period. There is a mentoring and succession plan in place inside Sime Darby. I think I can retire in two years from November 2017,” he added.
Sime Darby said its gearing had eased from a year ago, thanks to efforts in building up cashpile.
The group had repurchased RM2.7 billion of its sukuk in May, with the remaining RM800 million being novated to its plantations unit.
These amounts and additional revolving credit facilities expiring in early 2018 will be refinanced in preparation for the split of the group into three entities.
Sime Darby declared a final dividend of 17 sen per share, bringing the total payout for the year ended June 2017 to 23 sen a share.
This is more than the 21 sen a share dividend payout in the previous financial year ended June 2016.
The plantation division continues to be the biggest earnings contributor of around 40 per cent to the group.
Palm oil prices in April, May and June averaged at a higher RM2,848 per tonne compared with RM2,242 per tonne a year ago.
On outlook for the next few months, Bakke said palm oil prices are likely to trade sideways between RM2,500 and RM2,700 per tonne.
The group’s property division saw a profit decline due to slower sales and deferred launches throughout its townships in Malaysia.
Over at the United Kingdom, Sime Darby noted that 321 units of the Battersea Power Station Phase 1 redevelopment was delivered on promise.
Over the long-term, Bakke said some 8,000 acres of plantation land in Negri Sembilan will be redeveloped into real estate as Malaysian Vision Valley.
He also highlighted that Sime Darby’s industrial division saw lower profits, largely attributable to Bucyrus impairments.
In a filing to Bursa Malaysia yesterday, Sime Darby announced Tan Sri Yusof Basiron and Muhammad Lutfi are now redesignated as independent directors from being non-independent, previously.