KUALA LUMPUR (May 27): Sime Darby Bhd (KL:SIME) said it expects to deliver weaker core financial performance in the financial year ending June 30, 2025 (FY2025), compared to the previous year, after posting a 43% decline in net profit in its latest quarter.

In a filing with Bursa Malaysia, the conglomerate said the ongoing global economic uncertainty and volatility in financial markets are expected to pose challenges for both its industrial and motors divisions, which respectively contributed 37% and 17% of the group's pre-tax profit in the current financial year-to-date.

The motors division — for which Sime Darby holds the distribution rights to several luxury car brands including BMW — continues to be impacted by soft consumer demand and growing competition, particularly from Chinese automakers, it said.

Sime Darby also owns UMW Holdings Bhd, which distributes Malaysia’s top-selling car brands, Perodua and Toyota, and which contributed 28% of group pre-tax profit in the nine months ended March 2025 (9MFY2025).

For the third quarter ended March 31, 2025 (3QFY2025), net profit fell to RM193 million from RM340 million a year earlier. Revenue declined 13% to RM16.3 billion from RM18.8 billion in 3QFY2024. No dividend was declared for the quarter.

The group’s industrial division was weighed down by weaker performance in its Australasia operations, affected by adverse weather, currency fluctuations and a softer Australian dollar.

Its motors division also recorded lower profit and revenue in Malaysia, Hong Kong and New Zealand.

Meanwhile, UMW’s profit fell 26%, mainly due to losses in its lubricants business. Its UKHE Group, sold in October 2024, has been classified as discontinued operations, having been acquired solely for resale.

Despite the headwinds in the motors segment, group chief executive officer Datuk Jeffri Salim Davidson, in a separate statement, expressed optimism about the industrial division, citing robust mining demand as a positive driver, even amid currency-related cost pressures.

He said the group remains focused on cost control, efficient inventory management and operational agility — measures that have contributed to a RM1.7 billion improvement in operating cash flow year-to-date.

Jeffri added that despite market challenges, Sime Darby’s strong cash flow and solid balance sheet position the group well to weather current conditions.

For 9MFY2025, group net profit dropped nearly 60% year-on-year to RM1.3 billion from RM3.2 billion. The previous year’s results included a one-off gain of RM2 billion from the divestment of Ramsay Sime Darby Health Care. Revenue, however, rose 8.2% to RM52.3 billion from RM48.3 billion.

Sime Darby’s shares fell 27 sen or 12.6% to RM1.87 following the announcement on Tuesday — their lowest since Aug 22, 2023 — giving the group a market capitalisation of RM12.7 billion. Year-to-date, the stock has declined by over 19%.