KUALA LUMPUR: Malaysia’s plantations-to-motoring conglomerate Sime Darby Bhd posted a nine percent drop in fourth-quarter net profit as lower palm output hit sales and sluggish commodity prices and volatile currency markets also weighed on its businesses.
The weaker earnings at the world’s top oil palm planter by landbank size come as Malaysian palm oil prices have sunk nearly 26 percent so far this year to languish at more than five-year lows.
Sime said its plantation division was hurt by the drop in palm oil prices, but that it expected prices of the tropical oil to pick up in the long-run. “The plantation division was not able to achieve crude palm oil sales targets due to a drop in fresh fruit bunch production by seven percent compared to the previous financial year,” Sime Darby President and Group Chief Executive Mohd Bakke Salleh said in a statement.
The output fall was mainly due to poor crop weather in ndonesia, which contrasted with a bumper crop there last year. Net profit in the April-to-June period was 1.19bn ringgit ($377m), Sime Darby said in a filing to the Malaysian bourse. The firm’s financial year ended June 30, 2014. Revenue fell two percent year-on-year to 12.51bn ringgit.
Full-year net profit also fell 9 percent to 3.35bn ringgit. That missed the average forecast of 3.06bn ringgit by 24 analysts, according to Thomson Reuters data. Sime said the global economy remained challenging, with weak commodity prices and volatile foreign exchange markets to affect the group’s businesses.
Sime’s plantation business accounted for nearly half of its revenue in the fourth quarter, making up 657.7m ringgit,compared to its autos division which accounted for a little over 15 percent.
Sources said this month that Sime Darby, Asia’s third-largest listed industrial conglomerate, had hired four banks to arrange a stock market listing for its car distribution unit that could raise $500m by the second quarter of next year.
Reuters
