25/02/2010 (Flex News Food) - Sime Darby Berhad reported a pre-tax profit of RM1.8 billion for the first half of FY2009/10, an increase of 7% over the same period in the previous financial year.

The Plantation Division recorded an operating profit of RM1.3 billion in 1HFY2009/10, an increase of 14%, on the back of an increase in the sales volume of crude palm oil (CPO) coupled with improvements in Indonesian operations. Indonesian yields rose to 10.5 MT/ha from 8.3 MT/ha while oil extraction rates increased to 23.1% in 1HFY2009/10 from 22.4% over the same period last year.

Benefitting from the gradual economic upturn, the Property Division reported revenue of RM676 million for 1HFY2009/10, a 19% increase from the same period last financial year attributed to the recovery of the property market and the strong performance of its townships. Operating profit which includes gains from the disposal of a subsidiary company increased by 32% to RM179m from the same period last year.

The Motors Division continues to perform strongly with a 37% increase in revenue to RM4.7 billion from the same period last year, in line with the current rebound in global economic conditions. Reflecting the revenue improvements, operating profit increased by 31% to RM148 million from the same period last year due to better results from operations in Singapore, New Zealand and Thailand.

Industrial Division’s revenue has been fairly stable at RM4.1 billion. However, operating profit declined by 15% to RM377 million from the same period last year attributable to lower sales and margins in Australasia and Singapore for the period under review. Lower sales were partly due to deferments in capital expenditure by customers last year in light of depressed economic conditions during that period.

The Energy & Utilities Division recorded 35% lower revenue due to a 44% decline in revenue from the Oil & Gas and Engineering business unit as compared to the same period last year. The Division registered an operating loss of RM110 million attributable to cost escalation on fabrication and engineering projects as a result of higher off-shore costs.

Commenting on the performance of the Group, Dato' Seri Ahmad Zubir Murshid, President & Group Chief Executive of Sime Darby, said that he was pleased with the performance of the Plantation, Property and Motors Divisions who have reported significant improvements in their results for the first half of FY2009/10.

He also commended the tremendous effort that has been put in since the merger to improve the Plantation Division’s Indonesian operations which has since improved significantly.

However, Dato’ Seri Ahmad Zubir noted that there were issues with the Energy & Utilities Division, “We have faced several challenges with the Oil & Gas business unit especially with operational efficiency and project management.

Nevertheless, with a new management team on board, measures have been taken to increase operational efficiency and improve our project management capabilities.”

He also said that improvements in the Plantation Division’s Indonesian operations and Motor Division are testament to the Group’s ability to ensure that these businesses realize their full potential and the Group is confident that it will be able to achieve similar results with the Oil & Gas business unit.