PETALING JAYA: Sime Darby Bhd has no plans to exit the Hong Kong operations despite the escalating demonstrations on the island.
“Hong Kong is a mature market for us with China, it has affluent society and the market share of the luxury segment is high,“ group CEO Datuk Jeffri Salim Davidson (pix) said at a media briefing after the group’s AGM yesterday.
The Hong Kong market contributes 5.9% of the group’s revenue.
Jeffri highlighted its industrial operations there remain pro-fitable and are not affected by the ongoing demonstrations.
“There have been no damages to our assets there.”
The group has 1,200 employees in Hong Kong across its industrial and motor divisions.
As for the industrial business, the group’s Cater-pillar dealership in the territory is pro-fitable as it supplies a lot of equipment to infrastructure pro-jects, including the third runway for the Hong Kong International Airport.
Jeffri also noted there has not been a direct impact from the tariff increase due to the US-China trade war.
“If you look at the caterpillar machines in China, 95% of the machines sold in China are made in China, so there is a little impact of 5%.”
This also applies to its motor operations as most BMW vehicles are made in China with the exception of one SUV model, which is made in the US.
Meanwhile, Sime Darby expects to spend RM1.5 billion in capital expenditure (capex) for FY2020 which includes RM893 million spent on the acquisition of Gough Group in New Zealand and three dealerships in Sydney.
It is expected to receive approval for the dealership ac-quisition from the Australian regu-lators before the end of the year.
There is also higher allocation of RM500 million to RM600 million capex for maintenance for FY2020 from RM380 million from FY2019.
Moving forward, Jeffri said there are some acquisition plans in the pipeline, but may not necessarily materialise. Geo-graphically, the group prefers to balance high growth, high risk areas like China with Australia, which is more stable and a low risk area.
As for Sime Darby’s plans to divest its non-core assets, Jeffri reiterated that the group is committed to the rationalisation plans, but is not rushing to do so.
