Malaysia's Sime Darby Q2 net profit halves after demerger
KUALA LUMPUR, Feb 22 (Reuters) - Malaysian trading and logistics company Sime Darby Bhd's net profits dropped by more than half in its second quarter following spin-offs of its plantations and property divisions.
Sime Darby announced on Thursday net profits of 305 million ringgit ($77.9 million) for the quarter ending in December, versus 653 million ringgit for the corresponding quarter last year, as it spun off its plantations and property divisions in late November.
Revenue stood at 8.8 billion ringgit versus 8.1 billion ringgit a year ago.
"The lower profit was mainly due to the inclusion of two months' results from Sime Darby Plantation and Sime Darby Property during the current quarter, against 3 months in the previous corresponding quarter," said the company in a stock filing.
It added that the losses were partly offset by a reversal in depreciation and amortisation of its spun-off entities.
The group's industrial division saw profits climb on higher equipment deliveries and product support sales to the construction and mining sectors in China and Australia. Its logistics division also saw profit gains on higher throughput at its port in China.
Profits at Sime Darby's motors division however fell on losses in its Vietnam operations.
Following the demerger, Sime Darby will derive most of its earnings from its motor and heavy equipment dealership businesses, which made up most of its earnings in the past three years.
CIMB Research analyst Ivy Ng projected the group would record core net profit growth of 18 percent in its 2018 financial year, "driven mainly by higher contributions from the industrial and logistics divisions."
Sime Darby's share price has fallen over 3 percent since the demerger.
Sime Darby Plantation Bhd's shares have shed 1.8 percent to 5.50 ringgit since they debuted on Nov. 30. The company announced on Thursday a 34 percent rise in second quarter net profit from a year ago, as its fresh fruit bunch production improved.
Sime Darby Property's quarterly results are due next week. ($1 = 3.9150 ringgit) (Reporting by Liz Lee; Editing by Adrian Croft)
