Sime Darby Profit Rises 19% After Selling Health Unit Stake

Sime Darby Bhd., the world’s biggest listed palm oil producer, said fourth-quarter profit rose 19 percent after booking a gain from selling part of its health-care business.

Net income was 1.31 billion ringgit ($398 million), or 21.81 sen a share, in the three months ended June 30, from 1.1 billion ringgit, or 18.29 sen, a year earlier, the Kuala Lumpur-based company said today in a statement. Revenue fell about 7.8 percent to 12.9 billion ringgit.

Sime said it booked a 340 million ringgit gain from selling a 50 percent stake in Sime Darby Healthcare to Ramsay Health Care Ltd., Australia’s biggest operator of private hospitals. While full-year profit dropped 11 percent to 3.7 billion ringgit from a year ago on lower palm oil prices, it still exceeded Sime’s target of 3.2 billion ringgit, according to the statement.

“The group is currently in a strong position to continue delivering growth,” Chief Executive Officer Mohd Bakke Salleh said in the filing. “We remain steadfast in our efforts to expand profit pools through organic growth via improved operating efficiencies, while continuing to explore other growth opportunities.”

Profit from plantations dropped 51 percent to 399.4 million ringgit on lower prices. Sime fetched an average 2,250 ringgit a metric ton for its palm oil in the quarter, compared with 3,010 ringgit a year earlier, the company said.

Price Slide

Palm oil, the world’s most-used edible oil, tumbled last month to the lowest level since October 2009 as supplies outpaced demand. IOI Corp. and Kuala Lumpur Kepong Bhd., Malaysia’s second and third largest plantation companies by market value, also reported lower earnings.

Prices of the commodity may trend “slightly higher” towards the end of this year on demand, Tong Poh Keow, Sime’s chief financial officer, told reporters in Kuala Lumpur today.

“What is most important to us is the stability of the price,” she said. “Even at 2,500 ringgit, there’s still reasonably good margins based on our cost of production.”

The group has been doing feasibility studies on potential land acquisitions in Africa, Vietnam and Myanmar, Tong said. Going forward, rubber will become a larger part of the Sime’s business and the company may expand into sugar, said the chief financial officer.

Sime shares closed unchanged at 9.39 ringgit in Kuala Lumpur after the earnings announcement. The stock is down 1.4 percent this year, lagging a 2.3 percent gain in the benchmark FTSE Bursa Malaysia KLCI Index.

The group’s industrial division posted flat profits of 369.7 million ringgit, with stronger performances at its Australasian, Malaysian and China operations. Earnings from property almost doubled to 301.5 million ringgit on higher sales, while contributions from energy and utilities dropped 26 percent to 40.2 million ringgit, Sime said.

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