KUALA LUMPUR: Sime Darby Bhd expects a slight increase in the prices of vehicles it distributes when the Sales and Services Tax kicks in on September 1.
Group chief executive officer Jeffri Salim Davidson said the overall automotive market would likely slow down in the next few months before normalising.
“In theory, there will be an increase in prices and a slowdown in the last quarter of this year. The market will find its own equilibrium,” Jeffri said at a briefing on Sime Darby’s full-year results ended June 30, 2018 here today.
Sime Darby is the distributor of high-end vehicles including BMW and MINI in Malaysia.
Sime Darby’s net earnings increased 0.5 per cent year-on-year to RM618 million, while revenue for the group’s continuing operations rose 8.8 per cent.
The group’s continuing operations comprise industrial, motors, logistics and healthcare businesses, as the plantation and property businesses have been deconsolidated from it.
The group’s core net profit for the continuing operations increased 36 per cent to RM835 million. It excluded one-off gains, impairments and provisions for the financial year.
“Sime Darby’s strong earnings for financial year 2018 is largely attributed to the recovery of the mining sector in Australia and increased infrastructure spend in China,” Jeffri said.
Its motors division posted a profit before interest and tax (PBIT) of RM543 million, compared to RM633 million in the last financial year.
This was due to losses from the group’s exit of the BMW business in Vietnam, amounting to RM199 million, which was a key factor in the division’s decline of 14.2 per cent in profits.
Excluding this and other one-off items, the division’s profits increased 3.4 per cent mainly due to higher profits from the Hong Kong, Macau and Australia operations.
Meanwhile, Jeffri said the government’s decision to review mega infrastructure projects such as the East Coast Rail Link (ECRL), would have an impact on the company’s industrial business.
“There obviously will be some impact on our sale of machines and equipment in the next six to 12 months, but other projects such as the Pan Borneo Highway and West Coast Expressway, will help offset it,” he added.
He said the contribution from the industrial segment in Malaysia was small compared to China and Australia.