PETALING JAYA: Sime Darby Bhd, which saw lower performance in the financial year ended June 30, 2022 (FY22), is expecting a tough FY23 amid headwinds, mainly due to higher inflation and increased borrowing costs that will impact consumer sentiment, and marginally on supply chain issues that have not been fully resolved due to the China lockdown.
However, Sime Darby group CEO Datuk Jeffri Salim Davidson (pix) said it is still fairly confident as it has a broad-based business throughout the Asia-Pacific.
“We believe that our skilled workforce, broad geographical footprint, and the support of the world’s best brands in heavy equipment and automotive will help us to stay on course,” he told the press at Sime Darby’s Q4’22 financial results media briefing today.
The CEO reiterated that it has remained focused on its rationalisation plan to dispose of non-core businesses.
“We will continue to focus on its automotive and heavy equipment businesses moving forward. We signed the deal to divest Weifang Port in July, which signifies our complete exit from the logistics business,” he said.
For Q4’22, Sime Darby’s net profit jumped 31.76% to RM278 million from RM211 million in the same quarter last year due to increased profits from the industrial division and lower tax expenses. Revenue was lower at RM10.85 billion compared with RM11.30 billion last year.
It declared a second interim dividend of 7.5 sen per share for Q4’22.For the full year, the group reported a 23.08% decrease in net profit to RM1.10 billion compared with RM1.43 billion in FY21 mainly on the absence of a RM272 million gain from the sale of Tesco Malaysia stake in FY21. Revenue for the year was 4.06% lower at RM42.50 billion compared with RM44.30 billion in FY21.
Strong commodity prices drove equipment demand in its key market of Australia for the industrial division. However, higher overhead costs ate into its margins. Meanwhile, in China, a slowdown in construction activity led to a further contraction in the heavy equipment market.
Jeffri said it reported RM1 billion in profit in FY22 despite the multiple challenges brought on by a combination of supply chain disruptions and higher operating costs due to labour issues.
“The motors division had a tough year, especially in China. Malaysia was a standout performer despite two months of movement restrictions in the financial year, posting more than a 50% increase in profits from operations. This was thanks to our BMW and Porsche dealerships as well as our assembly operations.
“The feather in our cap for FY22 was the opening of our assembly plant for Porsche in Kulim, the first outside of Europe, which began delivering locally assembled Porsche Cayennes in March this year. The response from customers has been encouraging,” he remarked.