Sime Darby eyeing 5% FFB production growth for FY18

PETALING JAYA: Sime Darby Bhd, which saw fourth quarter net profit more than halve to RM571 million due to losses in its logistics division, and declines in the plantation and property divisions, is targeting a 5% year-on-year (y-o-y) increase in fresh fruit bunch (FFB) production for its plantation arm.
Its president and group CEO Tan Sri Mohd Bakke Salleh said in terms of FFB yield for its Malaysian operations Sime Darby is looking to increase production to 21 metric tons/hectare (mt/ha) against the 20.76 mt/ha produced last year.
“Looking at the second half of the calendar year from July, August right up to October we expect to see production higher than the previous year but come October up until the first half of next year, we expect to see a drop in production,” Mohd Bakke told reporters at a media briefing held in conjunction with the group’s announcement of its financial results.
For the financial year 2017 (FY17) ended June 30, Sime Darby achieved a 9.78% increase in FFB production from its overall operations against the previous year’s 9.62%. Its FFB yield stood at 19.4mt/ha. It is aggressively embarking on replanting exercises.

Sime Darby saw a 53.4% decline in net profit for the fourth quarter ended June 30 to RM571 million from RM1.23 billion a year ago. The group's revenue, however, edged higher by 6.1% to RM8.20 billion in the quarter under review from RM7.73 billion in the same period last year. Sime Darby has proposed to declare a final dividend of 17 sen a share for the quarter under review.
The group’s full-year net profit rose 0.7% to RM2.44 billion from RM2.42 billion, exceeding its key performance indicator (KPI) target. Its revenue on the other hand increased 5.6% to RM31.09 billion from RM29.45 billion in the previous financial year. It also recorded an impairment of RM684 million for the financial year.
Mohd Bakke said the impairment recorded is the group’s largest by far, and will allow it to start with a clean sheet for its demerger exercise, which it aims to conclude by end of November.
The demerger will see the listing of its divisions – Sime Darby Plantation Bhd, Sime Darby Property Bhd and Sime Darby Bhd itself – as separate entities on the Main Market of Bursa Malaysia.
Sime Darby, which entered into a memorandum of understanding with Kumpulan Wang Persaraan (Diperbadankan) and Brunsfield Development Sdn Bhd to lead the development of Malaysian Vision Valley covering 153,000ha of land, is working with the parties involved towards a definitive agreement for the project that is expected to take about 30 years.
Going forward, the group will be focusing on its motor division, which saw an increase in profit for the financial year.
As part of expansion plans for the motor division, Sime Darby is looking to expand its footprint to more countries in the Asia-Pacific region, beyond the 10 countries it already has a footprint.
Sime Darby shares fell 1.08% to close at RM9.13 on Friday.