KUALA LUMPUR: Sime Darby Bhd expects FY23 to be a challenging year as its first quarter results were dampened by weakening consumer sentiment for its motors division in China.
During the quarter, the group posted a net profit of RM207mil, down from RM236mil in the same quarter last year as it experienced lower margins from its China operations.
"The Motors division was impacted by market sentiment, which resulted in lower margins for higher volume. However, improved results from Malaysia and Australasia were able to help mitigate the impact from China," said group CEO Datuk Jeffri Salim Davidson in a statement.
Earnings per share was down to 3.1 sen from 3.5 sen in the comparative quarter.
The group's revenue was 14.5% higher at RM12.18bil.
"We kicked off FY2023 on a good note, against the backdrop of very trying economic conditions.,
"The Industrial business has seen strong growth with a 35 per cent jump in the first quarter. This was due mainly to higher demand for parts with our customers’ backlogged maintenance work coming in, and higher parts prices in Australasia," said Jeffri.
He added that its equipment rental business, Salmon Australia, which was acquired just over a year ago, also recorded positive contribution.
Moving forward, Jeffri said the group will continue to deliver the backlog of orders in Malaysia until the third quarter of FY23.
He also expects the recently secured BYD distributorship for Malaysia to being a lot of excitement to the market.
The industrial division, particularly the products and services supporting the mining sector, is expected to perform well this financial year with the backlog of maintenance work coming in and bullish commodity prices supporting continued investment in the resources sector.
“Sime Darby remains committed to enhancing the efficiency of our operations as we carry on with our expansion plans. We will continue to invest to grow our sales network for both the Motors and Industrial businesses as well as actively exploring merger and acquisition opportunities to extend our core businesses reach,” he added.
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