BY P. ARUNA
KUALA LUMPUR: Sime Darby Bhd recorded a 5.4% higher net profit to RM699mil for its third quarter ended March 31, while revenue jumped 21.6% to RM12.4bil, mainly on the back of higher crude palm oil (CPO) prices.
CPO prices averaged at RM3,088 per tonne during the quarter, a 40% jump from RM2,200 per tonne during the same period last year.
Group president and chief executive Tan Sri Mohd Bakke Salleh (pic) told a media briefing that it expects CPO prices to range between RM2,600 and RM2,800 per tonne next month, and remain above RM2,500 per tonne over the next six months.
“At the moment, the spot price is holding around RM2,700 per tonne and for forward months like August, it is below RM2,500 per tonne.
“Our view is that the price will be in the range of RM2,600 to RM2,800 per tonne next month, and for the forward months, we reckon the support will be at around RM2,500 per tonne. We do not think the price will drop below RM2,500 per tonne at least for the next six months,” he said.
On the group’s outlook for palm oil production, he said it expects a 3% increase in production during the last quarter, mainly from Malaysia, while production in Indonesia and from New Britain Palm Oil Ltd would remain flat. “We will close the year around 3% or 4% higher than last year,” he said.
On the planned listing of the group’s plantation and property businesses, Mohd Bakke said it would submit the prospectus during the third quarter of the year and expects to complete the exercise by December.
The group had announced its plans to create three standalone entities on Feb 27, 2017 by spinning off its plantation and property businesses into two new listed companies, leaving it with the trading and logistics businesses.
Mohd Bakke said it had also completed the restructuring of the group’s US$800mil multi-currency sukuk on May 23, 2017, in preparation for the listed pure-play entities.
Sime Darby’s chief financial officer Datuk Tong Poh Keow said 21.5% of the sukuk bondholders had agreed to novate the bond to the plantations unit, while the rest had chosen to cash out. “They were given an option either to tender out or to novate, depending on their preference,” she said.
On another matter, Mohd Bakke said the group was conducting a reprofiling exercise on its land bank. For the land bank under the property division, he said it had carried out an exercise to ascertain the value and potential of the land banks, and would divest those unlikely to generate satisfactory returns.
He said the property division currently had 17,000 acres of land bank that could be developed, and once the unit is listed, the Malaysia Vision Valley project will see the injection of land from the plantation division into the property division.
The group recorded RM1bil in pre-tax profit for the third quarter, up 27% from a year ago, boosted by improved contributions from the plantation, industrial and motor divisions.
For the nine months ended March 31, meanwhile, the group’s earnings jumped 40% to RM1.78bil from RM1.27bil in the previous corresponding period. Its pre-tax profit for the period jumped 48.1% to RM2.56bil from RM1.73bil, while revenue increased by 8.2% to RM34.88bil from RM32.23bil.
“Stabilising coal prices as well as increased activity in the construction sector in China and Malaysia served as catalysts for the industrial division. Despite tightening regulations and rising import costs, we are encouraged by the motor division’s performance, driven by higher demand in key markets,” the group said in a statement to the stock exchange.