This article first appeared in The Edge Financial Daily on March 5, 2019 - March 11, 2019

KUALA LUMPUR: Sime Darby Plantation Bhd (SDP), having rebranded its downstream entity Sime Darby Oils, is eyeing a higher revenue contribution from the downstream business.

“We believe we have to grow our downstream business, so our overall contribution is not skewed to our upstream business,” said SDP chief operating officer of downstream Mohd Haris Mohd Arshad.

As it stands, the upstream business contributed 80% of the group’s output and 20% from the downstream business, he told reporters at the launch of Sime Darby Oils yesterday.

Asked if the group is aiming for a 50-50 balance between its upstream and downstream segments, Haris said it is a “long-term goal”.

“Both upstream and downstream segments have the ambition to grow our business. It will be nice if we get a 50-50 balance, but I don’t think we can do it in five years,” said Mohd Haris, who is also Sime Darby Oils managing director.

He said the new entity would be involved in different types of oils, but palm oil would be the most dominant with an 85% share.

Mohd Haris said SDP’s downstream business currently has a global refining capacity of 3.8 million tonnes of oil. Of that, the group allocates two million tonnes as bulk. Of the remaining 1.8 million tonnes, half is used for its frying oils.

Besides oils for frying, Sime Darby Oils would also focus on bakery, spreads, specialty ingredients and animal feed businesses, he said.

The group also said its downstream business is looking at further expansion into India and Indonesia.

On the expansion in Indonesia, Mohd Haris said the group would be looking at secondary refining in Java or Sumatra.

He said the group’s Indian expansion plans would be contingent on how it plans to market itself in India. “We have to make the best deal based on the limited resources we have,” he said.

Meanwhile, SDP head of Europe, Middle East and Africa Andrew Timothy Worrall said the group is still under-represented in the Middle East and North Africa.