26/11/2010 (Bloomberg) - Sime Darby Bhd., the world’s biggest publicly traded palm oil producer, reported a profit for the three months to September after two quarterly losses caused by write-downs from project overruns.

Fiscal first-quarter net income fell to 654.7 million ringgit ($207 million), or 10.89 sen per share, from 684.6 million ringgit, or 11.39 sen a share, a year ago, the Kuala Lumpur-based company said in a filing today. Revenue in the quarter rose 13.5 percent to 8.8 billion ringgit, it said.

The 100-year-old company made total provisions of 2.1 billion ringgit in the year ended June 30 on oil and gas projects in Qatar and Malaysia. Sime has said it plans to start a lawsuit against some of the people responsible for the cost overruns and losses at its energy and utilities division.

“This will not be repeated,” Mohd. Bakke Salleh, group chief executive officer, told reporters in Kuala Lumpur today.

Sime stock rose 0.1 percent to close at 8.74 ringgit in Kuala Lumpur trading ahead of the earnings announcement. The shares have fallen 2.6 percent this year compared with the 17 percent gain in the country’s benchmark index.

Contributions from the Sime’s palm plantations business fell 22 percent in the quarter on lower production of fresh- fruit bunches and reduced extraction rates, the company said. Profit from so-called downstream operations also dropped.

The decline came even as average prices for its crude palm oil rose to 2,511 ringgit per metric ton in the period compared with 2,245 ringgit a year ago, it said.

Earnings from its motors and industrial units climbed, while health care, energy and utilities contributions fell, said Sime.

Cars to Ships
Set up in 1910 as an operator of rubber plantations, Sime Darby diversified into businesses ranging from cars and ship-building to property development. It made an unsuccessful foray into banking in the 1990s. The company sold control of Sime Bank in 1999 after posting a loss of 540.9 million ringgit the previous year, its first deficit in two decades.

Sime is planning legal action after evidence of inappropriate conduct was found during an internal probe of the Bakun hydroelectric dam project in Malaysia’s eastern Sarawak state and of Middle East projects with Qatar Petroleum and Maersk Oil Qatar, the company said on Nov. 16.

The group will be reorganized starting Jan. 1, reverting to a previous structure where each division would be separate with an independent board, audit committee and tender committee, Mohd. Bakke said on Nov. 16.

Sime has a range of assets, including a stake in tire maker Continential AG, which it now considers non-core, Mohd. Bakke said today. The company will decide which of these to sell in the first quarter of next year, he said.

The group plans to retain its insurance interests as well as its stake in the Malaysian operations of supermarket operator Tesco Plc for now, the chief executive said.