Sime Darby Q3 bottom line bumped up by disposals

KUALA LUMPUR: Sime Darby Bhd, which posted a 60% increase in net profit for the third quarter ended March 31, 2016 (Q3), aims to complete its asset monetisation exercise on 14 industrial assets in Australia by end of the financial year ending June 30, 2016 (FY16) or early FY17.
"In Australia, we have discussed with a few interested parties and right now, we have narrowed it to just one potential buyer. Hopefully things pan out nicely. We are looking to sell all 14 assets to one buyer, it is easier that way," president and group chief executive Tan Sri Mohd Bakke Salleh told reporters at its third quarter results briefing yesterday.
Most of the assets for sale in Australia are Caterpillar facilities located along the East Coast of Australia. Sime Darby's industrial division is a dealer for Caterpillar's heavy machinery. Bakke said it hopes to close the deal by June 30.
The group is also in the midst of selling a majority interest of 75% in three Singapore properties to Blackstone Real Estate Partners Ltd. The three properties are Sime Darby Centre at 896 Dunearn Road, Sime Darby Enterprise Centre along Jalan Kilang and Sime Darby Business Centre at 315 Alexandra Road.
In Q3, the group's net profit rose 60% to RM663.5 million from RM414.7 million a year ago due to the recognition of gains from the asset monetisation exercise. Revenue for the quarter rose 2% to RM10.2 billion from RM9.9 billion a year ago.
For the nine months ended March 31, 2016, net profit fell 11% to RM1.3 billion from RM1.4 billion a year ago while revenue rose 4% to RM32.2 billion from RM30.9 billion a year ago.
On its plantation division, Bakke said it expects its production for Malaysia to be down by 6% over the next one to two years. In Indonesia, it is looking at a 8-10% decrease. The group is looking at an overall decrease of 9% in its crop by year-end due to the El Nino phenomenon.
As for crude palm oil prices, Bakke said it is expected to range between RM2,500 and RM2,700 per tonne.
He said the group will continue undertaking deleveraging measures to improve its liquidity profile. Earlier in March, it carried out the first fund raising exercise under the perpetual subordinated sukuk programme with proceeds of RM2.2 billion, which was used to pare down debts.
The group reduced its total borrowings to RM16.6 billion as at March 31, 2016 from RM19.6 billion as at Dec 31, 2015. The group maintained its FY16 net profit target of RM2 billion.
Meanwhile, on talks of Tabung Haji chief Tan Sri Ismee Ismail joining Sime Darby, Bakke said he has no knowledge of the issue. Ismee, who will be leaving Tabung Haji on July 1, was speculated to join the group as COO.
"I'm equally in the dark as you are," he said.