(From left) Sime Darby Bhd group chief financial officer Muhammad Noor Abd Aziz, group chief executive officer Datuk Jeffri Salim Davidson, and UMW division managing director Mustamir Mohamad at the media briefing on the group's financial results for the fourth quarter ended June 30, 2024 on Tuesday. (Photo by Suhaimi Yusuf/The Edge)

KUALA LUMPUR (Aug 27): Sime Darby Bhd (KL:SIME) closed the financial year ended June 30, 2024 (FY2024) on a strong footing, with its net profit more than doubling to RM3.31 billion from RM1.46 billion in the previous year. This was largely due to a RM2 billion gain from the disposal of Ramsay Sime Darby Health Care (RSDH) in December 2023.

As a result, earnings per share grew to 48.5 sen for FY2024, compared with 21.4 sen for FY2023.

However, stripping out the one-off item, the automotive and industrial conglomerate reported a core net profit of RM1.3 billion in FY2024, up 14% from FY2023, on higher profits from the industrial business in Australia, the strong performance of the motors businesses in Malaysia, Singapore and Taiwan, as well as the maiden profit contribution from the UMW division.

Revenue for FY2024 saw a 39% jump to RM67.13 billion from RM48.29 billion in FY2023.

Sime Darby declared a second interim dividend of 10 sen per share for FY2024, payable on Sept 30. This brings the total dividend payout for FY2024 to 13 sen per share or RM886 million.

For the fourth financial quarter ended June 30, 2024 (4QFY2024), however, Sime Darby saw net profit fall 85.7% to RM89 million from RM622 million a year earlier, mainly due to one-off impairments and provisions at the motors division, losses at the motors operations in China, higher finance costs and deferred tax provisions. This resulted in lower earnings per share of 1.3 sen for 4QFY2024, compared with 9.1 sen for 4QFY2023.

Nevertheless, revenue for the quarter saw a 41.4% improvement to RM18.8 billion from RM13.29 billion a year earlier.

“It was a very busy year for the group in terms of acquisitions. We successfully completed the acquisitions of Cavpower and UMW. We also concluded the sale of RSDH during the year, marking a full exit from the healthcare segment, and to enable the group to fully focus on growing our core businesses of motors and industrial," said Sime Darby group chief executive officer Datuk Jeffri Salim Davidson in a statement on Tuesday.

Going forward, Sime Darby points to excess production by automotive manufacturers that have led to an oversupply situation affecting China and other markets in which the group operates.

"This has led to downward pressure on margins. We expect this situation to persist through FY2025," it said in a separate filing with Bursa Malaysia.

"In Malaysia, total industry volume continues to hold up, especially in the mass market segment, though there is an expectation that margins will also be marginally dampened. The strong performance of the industrial division, however, continues to be supported by robust demand for equipment and maintenance support from the mining industry in Australia," the group added.

Despite the challenging market situation, Sime Darby expects its core financial performance for FY2025 to be consistent with that of the just-ended FY2024.

At Tuesday's noon market break, Sime Darby shares settled down three sen or 1.13% at RM2.63, with 3.98 million shares traded. Its market value stood at RM17.93 billion. The stock has risen 10.5% so far this year.