Sime Warns of Weaker FY2025 After Profit Drops 43%

Sime Darby Bhd expects its core financial performance to be weaker in the financial year ending June 30, 2025 (FY2025), compared to the previous year. This comes after the group posted a 43% drop in net profit in its latest quarter.

The company based in Bursa Malaysia filing indicated global economic uncertainty and market volatility are likely to affect its industrial and motors divisions. These two segments made up 37% and 17% of Sime Darby’s pre-tax profit so far this year.

The motors division, which handles brands like BMW, is under pressure from weak consumer demand and rising competition, especially from Chinese automakers.

Sime Darby also owns UMW Holdings Bhd, which distributes popular marques like Perodua and Toyota in Malaysia. UMW contributed 28% of the group’s pre-tax profit in the nine months ended March 2025.

For the third quarter ended March 31, 2025, Sime’s net profit fell to RM193 million from RM340 million a year earlier. Revenue declined to RM16.3 billion from RM18.8 billion. No dividend was declared for the quarter.

The industrial division’s performance was also hurt by weaker results in Australasia due to bad weather, currency swings, and a softer Australian dollar. The sale scenario was reported for the motors division - lower sales and earnings in Malaysia, Hong Kong, and New Zealand.

UMW’s profit dropped 26%, mainly because of losses in its lubricants business. The UKHE Group, which Sime Darby was sold in Oct 2024, has been classified as discontinued operations.

Despite challenges in the motors segment, group CEO Datuk Jeffri Salim Davidson remains optimistic about the industrial division, pointing to strong mining demand as a positive factor. He said the company is focusing on cost control, efficient inventory management, and operational agility.

These steps have helped improve operating cash flow by RM1.7 billion so far this year.

Jeffri went on to add - Sime’s strong cash flow and balance sheet put it in a good position to handle current market conditions.

For the nine months of FY2025, the group’s net profit fell nearly 60% to RM1.3 billion from RM3.2 billion. Last year’s figure included a one-off RM2 billion gain from selling its stake in Ramsay Sime Darby Health Care. 

However, revenue rose 8.2% to RM52.3 billion from RM48.3 billion.

This announcement resulted in Sime’s share prices to drop 27 sen or 12.6% to RM1.87 — the lowest since August 22, 2023. Additionally, its stock prices has declined over 19% year-to-date, giving the group a market value of RM12.7 billion.

Source: The EDGE