Monday, September 5, 2011

Sime ... Sep11

There could be potential mergers and acquisitions arising from Sime Darby Bhd's five-year strategy blueprint.

The conglomerate's management had guided for capital expenditure of RM6bil in the current financial year (FY12) which included an allowance for potential mergers and acquisitions.

This may start to take shape during the five-year period and can possibly involve a tie-up with Felda Global Ventures, which owns significant downstream assets outside Malaysia. Sime Darby president and group chief executive Datuk Mohd Bakke Salleh, formerly Felda's chief, has intimate knowledge of these assets, which will help in establishing strategic tie-ups.

Sime Darby's management spoke about landbank expansion for its plantation division, broadening of its industrial business through the potential acquisition of the Bucyrus dealership in Australia's Northern Territory from Caterpillar, and a bigger presence for its motor division in the Asia-Pacific during a recent briefing.

Sime Darby should have no problem funding mergers and acquisitions in view of its low gearing of 8.7 times.

Sime Darby's financial results were above expectations, and pointed out that its plantation, industrial and motor divisions should continue to drive growth in the near future.

Sime Darby posted a 404% year-on-year (y-o-y) jump in net profit to RM3.66bil and a 28.8% year-on-year increase in revenue to RM41.86bil for FY11.

The plantation division was the top earnings contributor with a 56% y-o-y increase in profit before interest and tax (PBIT)) to RM3.3bil, followed by the industrial division which recorded its highest ever PBIT with a 41% y-o-y increase to RM1.1bil, and the motor division which registered a 64% y-o-y increase in PBIT to RM633mil.

The motor division was the highest revenue contributor to the group for the first time ever with RM14.85bil, followed by the plantation division with RM13.17bil.

The industrial division was driven by strong Caterpillar equipment sales in Australia as well as China while the motor division continued to see strong BMW sales in China and Malaysia.

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