SIME ... Dec10

Sime Darby Bhd’s energy and utilities (E&U) division swung back into the black in its 1QFY11 ended Sept 30, 2010 with operating profit of RM33.1 million compared with the immediate preceding quarter when an additional RM777.3 million potential losses on projects were set aside in the troubled division.

The E&U division, which is made up of oil & gas/engineering (O&G) and power & utilities, managed to turn around mainly due to stronger performances from its Thailand power plant and port operations in China.

However, the O&G unit remained in the red with a RM23 million loss in the quarter under review due to overhead costs, while the power & utilities unit saw profit before interest and tax (PBIT) rising 11.4% year-on-year (y-o-y) to RM55.6 million. These resulted in the decrease in operating profit of the E&U division by 50% from RM66.2 million in the same quarter a year ago.

The 4QFY10 provision of RM777.3 million was for three O&G projects namely the Bulhanine and Maydan Mahzam project with Qatar Petroleum, the Maersk Oil Qatar project and a project known as the “Marine Project.” No provisions for the Bakun hydroelectric projects were made for 4QFY10.

The E&U division fell into the red in 2QFY10 and losses ballooned to RM1.75 billion by 4QFY10. The total loss of RM1.75 billion for the full year included provision for foreseeable losses of RM969 million and impairment of RM412.4 million.

Including provisions of RM1.3 billion in the previous three quarters, total provisions for FY10 came up to RM2.08 billion.

Sime Darby registered a net profit of RM654.7 million for the quarter under review after two quarters of losses. However, compared with a year ago, its 1QFY11 fell 4.4% mainly due to the lower contribution from the plantation, E&U and healthcare & others divisions.

The group’s revenue rose 13.5% to RM8.78 billion from RM7.73 billion previously while posting basic earnings per share of 10.89 sen versus 11.39 sen. No dividend was declared for 1QFY11 while net assets per share stood at RM3.52 as at Sept 30.

The plantation division operating profit dropped 22.3% to RM492 million in 1QFY11 from RM633.6 million a year ago due to lower production of fresh fruit bunches (FFB), lower oil extraction rate (OER) and lower contribution from the downstream operations despite higher average crude palm oil (CPO) price realised for the quarter of RM2,511 per tonne.

On its motors division, it recorded a “sterling peformance” for the quarter with operating profit surging 137% y-o-y to RM151.2 million from RM63.8 million driven by higher sales growth in China, Malaysia, Thailand, Australia and New Zealand.

The industrial division also reported an increase of 23.4% in operating profit to RM232.3 million compared with the same quarter last year as a result of stronger demand for heavy equipment in Australia, Malaysia and China.