Sime Darby to allocate RM1bil capex for FY20
ARA DAMANSARA: Sime Darby Bhd is allocating over a RM1 billion in capital expenditure (capex) for the year ending June 30, 2020 (FY20).
This is mainly to upgrade car showrooms and assembly plant for its motors division, group chief financial officer Mustamir Mohamad said.
“We spent about RM361 million capex and RM183 million on acquisitions in FY19. For FY20, the budgeted capex also includes maintenance and replacement in industrial and motors divisions,” Mustamir said at Sime Darby’s FY19 financial result here yesterday.
He said the group was likely to increase its debt-to-equity ratio up to 0.6 times (optimal level) from the current 0.3 times, which stood at RM2.6 billion as at June 30, 2019.
Mustamir said the current low gearing ratio provides room for the company to gear up more to grow its businesses via potential acquisitions.
He said the group was also likely to divest its non-core assets in two to three years, particularly for its insurance, retail and property developer Eastern & Oriental Bhd.
“We will wait for the right time and valuation,” he added.
Meanwhile, group chief executive officer Datuk Jeffri Salim Davidson confirmed that Sime Darby had bid to supply and manage the government's fleet of vehicles.
“We are a big player on car leasing business, probably we have one of the largest fleets in Malaysia. We have the vest coverage (branches) throughout the country.
“We would like think that we are in a good position. However, the government is doing a thorough job in evaluating who they want to pick for the job,” he said.
Jeffri said the group was on the lookout to expand its healthcare division with the potential acquisition of the Columbia Asia.
“We have established our hospital segment. The potential buy of Columbia Asia is a nice-fit for us but we will see,” he said, adding there was no timeline set for the acquisition.
Sime Darby’s net profit rose 12.88 per cent to RM184.00 million in the fourth-quarter (Q4) ended June 30, 2019, from RM163.00 million a year ago.
The conglomerate said the higher earnings were on the back of a recovery in the mining and construction sectors in Australia and higher sales of cars in China.
Its Q4 revenue increased 8.75 per cent to RM9.32 billion from RM8.57 billion previously, fuelled by strong performance of its industrial and motors divisions, Sime Darby said in a filing to Bursa Malaysia yesterday.
For the full-year, Sime Darby’s net profit surged 53.4 per cent to RM948.00 million from RM618 million, while revenue jumped 6.89 per cent to RM36.16 billion from RM33.83 billion a year ago.
On another note, Jeffri said he did not know about the current Permodalan Nasional Bhd chief executive officer Datuk Abdul Rahman Ahmad joining Sime Darby as a chairman, because it was a shareholders’ matter.
A financial portal, quoting sources, said Abdul Rahman was expected to leave PNB and join Sme Darby as chairman, following the expiry of his contract next month.
- August 28, 2019 @ 8:53am