SHAH ALAM, Feb 26 (Bernama) -- Sime Darby Bhd's order book moving forward is expected to be driven largely by its businesses in Australia, which include the mining and construction sectors.
Group chief executive officer Datuk Jeffri Salim Davidson said growth in the mining industry in the Asia-Pacific region is propelling demand for both mining equipment replacement cycles and expansion.
"Our order book consists largely of our large machines in Australia. We don't really have an order book in the motor segment. Some of our big trucks take around six-nine months to be built.
"For China's industrial space, we are selling largely excavators and that were more on retail (business). So, it’s similar to our motor segment, of which we don't have the order book per se," he told a media briefing on the group’s first half financial year results ended Dec 31, 2019, here, today.
As at Dec 31, 2019, the group's order book stood at RM2.87 billion, a 15.4 per cent increase compared to RM2.49 billion as at the end of 2018.
Jeffri said the group's business in Australia is still very strong at the moment, with demand for Sime Darby's machines and services remain positive and moving forward.
"On top of that, we also got a new mine in Australia, which has opened up and is buying the machines from us. Some of the machines are already in the order to be delivered. I guess the outlook (for the order book) is fairly positive for the next year and a year and a half," he added.
For the first-half financial performance, Sime Darby's industrial division increased 49.5 per cent to RM287 million in the current quarter amid higher revenue from Australasia and China.
Meanwhile, the motor division saw its profit rose 5.9 per cent to RM143 million, supported by a significant increase in profits in China (including Hong Kong, Macau and Taiwan), mainly from improved margins and higher revenue from BMW China’s operations.
This was largely offset by the weaker results in Singapore’s operations as a result of lower margins.
On the motor division’s outlook, Jeffri said sales in China are expected to be significantly affected by COVID-19 but the luxury segment would likely continue growing in the longer term on the back of growing number of higher income households in China.
Meanwhile, he said Sime Darby is looking to exit its non-core businesses, including from supermarket chain Tesco in Malaysia.
“Our 30 per cent stake in Tesco is not core to Sime Darby’s business. In the long run, we will be exiting the business. There has been some bids from Thai tycoons, who are looking to acquire Tesco Plc’s stake in the supermarket chain in Malaysia and Thailand.
“Tesco is probably in talks with banks, investors and advisors. The process is ongoing at the moment,” he said.
He said the group should generate more cash from the non-core asset disposal, allowing the company to pay off loans, declare dividend or invest in new businesses.
SIME DARBY, Australia, order book, financial, motor segment