Malaysia's Sime Darby Q1 net profit down 8%

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KUALA LUMPUR: Malaysian conglomerate Sime Darby said on Tuesday net profit for the first quarter fell 7.8 percent year-on-year as lower prices cut into its palm oil earnings.

The world's largest listed palm oil producer by acreage recorded a profit of 990 million ringgit ($330 million) in the three months ending September 30 compared with 1.07 billion ringgit for the same quarter last year.

The plantation division's profit declined as crude palm oil prices stood at 2,707 ringgit per tonne, down from 2,946 ringgit per tonne in the same quarter last year, the company said in a statement.

Prices have fallen as slowing economic growth in China and Europe reduced demand and caused stockpiles to increase.

But stronger performances in the conglomerate's other divisions, namely industrial, property, motors, and energy and utilities, offset the lower contribution from the plantation unit.

Sime Darby said it targets a net profit of 3.2 billion ringgit for the current financial year. For the last fiscal year, net profit increased 13.0 percent from the previous year to more than four billion ringgit.

"While we remain positive on the long-term fundamentals of the group, we are cautious on the outlook for the rest of the financial year," said president and group chief executive Bakke Salleh.

He said this year's target was based on "conservative assumptions" given the continuing global uncertainties as Europe and the US struggle with financial crises and commodity prices are volatile.

Bakke added the group remained "positive" on the performance of the plantation unit as its palm fruit production grew 5.8 percent in the first quarter year-on-year.

It was the second quarter in a row in which the group saw a decline in profit. Net profit for the fourth quarter sank 16.2 percent year-on-year due to a slight decline in palm fruit production.

Sime Darby operates in more than 20 countries. It is one of the largest companies on the Malaysian stock exchange with a market capitalisation of 58.9 billion ringgit.


Martin Koh | 86666 944 | R020968Z
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