KUALA LUMPUR: Sime Darby Bhd more than doubled its net profit to RM589 million for the first quarter ended Sept 30 2023 (Q1 FY24), from RM207.0 million a year ago.
This was primarily driven by its effective business strategy, which saw the industrial division significantly rebound in the quarter under review compared to the corresponding quarter in FY23, it said in a statement today.
The group's revenue was 14.8 per cent higher to RM13.98 billion than the RM12.18 billion recorded in Q1 FY23.
Profit before interest and tax (PBIT) for Sime Darby's industrial division surged 65.7 per cent to RM358 million in the quarter, mainly due to an increase in profits from the division's Australasia operations from RM186 million to RM309 million.
"The increase was largely due to higher product support revenue and profit contribution from Onsite Rental Group, which the group had acquired in April 2023," it noted.
Overall PBIT for the motors division increased 15.3 per cent to RM203 million despite a continued slowdown in China which resulted in lower profit margins at the Chinese mainland operations.
"The overall positive motors performance was attributable to the Malaysian operations which did well, recording an 80 per cent increase in PBIT."
Also included in the results was a gain of RM251 million on the disposal of Malaysia Vision Valley land to Sime Darby Property Bhd.
"Despite unprecedented geopolitical tensions and exceptionally trying economic conditions, we are pleased to have kicked off FY24 on a positive note," Sime Darby group chief executive officer Datuk Jeffri Salim Davidson said.
"The industrial business, in particular, has seen very strong growth. This was primarily due to higher demand for product support and the positive contribution from Onsite, a distinguished market leader in providing equipment rental solutions to clients across diverse industries in the Australian market," he added.
The group completed the acquisition of Cavpower Group, the Caterpillar dealerfor South Australia, during the quarter.
"South Australia is home to over 150 mining companies, and we are confident that there are tremendous opportunities for the heavy equipment and rental business. This move is in line with our new 5-year Strategy Masterplan, a strategic blueprint that will guide us from FY24-28 and further enable us to capitalise on
our strengths and expand capabilities across our entire value chain," Jeffri said.
Together with its joint venture partner Ramsay Health Care Ltd, Sime Darby entered into a sale and purchase agreement (SPA) with Columbia Asia Healthcare Sdn Bhd on Nov 10 to sell Ramsay Sime Darby Health Care Sdn Bhd (RSDH) for RM5.68 billion.
The RSDH sale marks Sime Darby's full exit from the healthcare business, allowing sharper focus on its two core businesses of industrial and motors.
"Despite this solid start for FY2024, we are most certainly conscious of the risk ahead against the backdrop of a subdued global economic outlook.
"Looking forward, we are highly optimistic that that the UMW Holdings Bhd deal will help to broaden our earnings and allow us to capitalise on the mass volume segment, while unlocking further value by leveraging our proven strengths and capabilities in the automotive sector," Jeffri said.