MARKET DEVELOPMENT
Sime Darby Hit By Lower CPO Price, Pre-tax Profit Slips 22 Pct
Sime Darby Hit By Lower CPO Price, Pre-tax Profit Slips 22 Pct
25/02/2016 (Bernama) - Sime Darby Bhd's pre-tax profit slipped by 22 per cent to RM463.55 million for the second quarter ended December 31, 2015 due to lower crude palm oil (CPO) prices and a challenging business environment compared with RM592.70 million posted in the same quarter previously.
Revenue, however, increased to RM11.83 billion from RM10.74 billion recorded in the corresponding quarter in 2014, said the plantation giant in a filing to the local bourse.
The lower average CPO price realised and fresh fruit bunch (FFB) production coupled with a challenging business environment weighed on earnings contribution from its plantation division, said President and Group Chief Executive Tan Sri Datuk Seri Mohd Bakke Salleh in a statement.
For the half year ended December 31, 2015, the group recorded a pre-tax profit of RM934.5 million versus RM1.26 billion in the first half of 2014.
Revenue was up RM22 billion, for the period under review, against RM20.86 billion chalked up in corresponding quarter.
Explaining further, he said FFB production across all regions were impacted by severe weather conditions resulting in a four per cent decline in Malaysia's output in the said quarter.
Among others, he said New Britain Palm Oil Ltd (NBPOL)'s upstream performance was also hit by the prolonged drought caused by the El Nino across Papua New Guinea and Solomon Islands, which affected all crops including its cattle business.
During the quarter, average CPO price realised was lower at RM2,066 per tonne compared with RM2,123 per tonne recorded in the same quarter in 2014.
"The decline of three per cent in the current quarter was largely due to the lower average CPO price realised in Indonesia arising from the impact of the export levy of US$50 per tonne imposed by the Indonesian government which took effect on July, 16 2015," said Mohd Bakke.
As for the performance of other divisions, he said the downturn in the mining sector and slowing growth in China continued to significantly impact the industrial division while consumer-driven businesses remain tested by bearish sentiment.
"Notwithstanding these headwinds, I am encouraged by the higher profit contributions from the motors and property divisions in the second quarter of 2015/2016 financial year in light of higher sales from the luxury car segment and increased contribution from the Pagoh Education Hub," he said.
The management, he said continued to undertake and evaluate deleveraging efforts and rightsizing actions to ensure that the group had the right capacity in place to face the tough business condition.
Sime Darby recently proposed a RM3 billion perpetual subordinated sukuk programme to improve the group's gearing profile.
Its share price was 23 sen lower at RM7.73 as at 12.30pm.
Revenue, however, increased to RM11.83 billion from RM10.74 billion recorded in the corresponding quarter in 2014, said the plantation giant in a filing to the local bourse.
The lower average CPO price realised and fresh fruit bunch (FFB) production coupled with a challenging business environment weighed on earnings contribution from its plantation division, said President and Group Chief Executive Tan Sri Datuk Seri Mohd Bakke Salleh in a statement.
For the half year ended December 31, 2015, the group recorded a pre-tax profit of RM934.5 million versus RM1.26 billion in the first half of 2014.
Revenue was up RM22 billion, for the period under review, against RM20.86 billion chalked up in corresponding quarter.
Explaining further, he said FFB production across all regions were impacted by severe weather conditions resulting in a four per cent decline in Malaysia's output in the said quarter.
Among others, he said New Britain Palm Oil Ltd (NBPOL)'s upstream performance was also hit by the prolonged drought caused by the El Nino across Papua New Guinea and Solomon Islands, which affected all crops including its cattle business.
During the quarter, average CPO price realised was lower at RM2,066 per tonne compared with RM2,123 per tonne recorded in the same quarter in 2014.
"The decline of three per cent in the current quarter was largely due to the lower average CPO price realised in Indonesia arising from the impact of the export levy of US$50 per tonne imposed by the Indonesian government which took effect on July, 16 2015," said Mohd Bakke.
As for the performance of other divisions, he said the downturn in the mining sector and slowing growth in China continued to significantly impact the industrial division while consumer-driven businesses remain tested by bearish sentiment.
"Notwithstanding these headwinds, I am encouraged by the higher profit contributions from the motors and property divisions in the second quarter of 2015/2016 financial year in light of higher sales from the luxury car segment and increased contribution from the Pagoh Education Hub," he said.
The management, he said continued to undertake and evaluate deleveraging efforts and rightsizing actions to ensure that the group had the right capacity in place to face the tough business condition.
Sime Darby recently proposed a RM3 billion perpetual subordinated sukuk programme to improve the group's gearing profile.
Its share price was 23 sen lower at RM7.73 as at 12.30pm.