Sime Darby cuts capex to RM4b

SIME

Malaysia's largest conglomerate, Sime Darby Bhd has revised its capital expenditure (capex) allocation for the current financial year to RM4 billion from RM6 billion set earlier, said president and Group chief executive Tan Sri Datuk Mohd Bakke Salleh.

He said the reduction of RM2 billion was partly due to changes in the underlying assumption and business environment.

"We have taken into consideration our performance as well as the external landscape in which the various businesses operate in.

"So, in line with that we decided to only leave the capex to what we consider to be absolutely important and critical to our operations," he told a press conference after announcing the company's first quarter results today.

Elaborating on the new capex, Mohd Bakke said up to 50 per cent would be set aside for the plantation division, 20 per cent each for industrial and property divisions and the remaining 10 per cent for motors division.

He said the company would invest a total of RM420 million to build a new building in Ara Damansara for the operation of the motors division, which will showcase a lot of mass brand vehicles as well as to act as a service centre.

The new building, with the single largest capex for the motors division, was expected to complete in three years, he added.

Going forward, Mohd Bakke said Sime Darby planned to list its Indonesian unit on The Jakarta Stock Exchange next year.

"We are exploring the option and avenue of expanding the business by either merging with the existing businesses or just going to the market, do an IPO (initial public offering) and unlock value as well, and use the proceeds to expand further.

"In Indonesia today, it's not easy to acquire good landbank anymore...we are looking at next year as the target," he added.

The company also aimed to acquire more land to expand its plantation division, particularly in Africa and Indonesia.

Meanwhile, Sime Darby's pre-tax profit for the first quarter ended September 30, 2013 fell to RM714.21 million from RM1.28 billion in the same period a year ago.

The 44 per cent fall was due to the challenging market conditions where most of the businesses operate in.

Revenue slipped to RM10.76 billion from RM11.741 billion previously.