KUALA LUMPUR (Aug 27): Sime Darby Bhd (KL:SIME) expects its core financial performance in financial year 2027 to remain broadly in line with the year just ended, as muted consumer demand and heightened competition continue to weigh on the automotive market.
The automotive and industrial group recently reported a 58% decline in its fourth quarter profit and a 15% drop in 2026 full-year earnings, respectively, mainly due to the absence of a one-off gain.
Net profit for the three months ended June 30 plunged 57.8% to RM322 million from RM763 million a year earlier mainly due to impairments and provisions recognised during the quarter and the absence of an Malaysia Vision Valley (MVV) land-disposal gain.
The corresponding quarter last year included RM443 million from the MVV disposal.
Sime Darby declared a second interim dividend of 11 sen per share for FY2026, up from 10 sen a year earlier. The dividend, amounting to RM750 million, will be paid on Sept 30. Together with the three sen first interim dividend, this brings the total FY2026 payout to 14 sen per share, unchanged from FY2025.
Revenue fell 5.9% to RM16.71 billion for the three months ended June 30, 2026 (4QFY2026) from RM17.76 billion, according to the group in a filing with Bursa Malaysia on Thursday.
As at end-June, Sime Darby had cash and cash equivalents of RM2.44 billion. Total borrowings stood at RM6.39 billion, comprising RM3.68 billion of long-term borrowings and RM2.71 billion of short-term borrowings.
Overall, Sime Darby closed its FY2026 with its net profit having fallen 14.5% to RM1.76 billion, while revenue slipped 0.8% to RM69.47 billion.
Likewise, the lower bottom line was mainly due to a smaller gain from the disposal of MVV land compared with the preceding financial year, as well as one-off impairments and provisions recognised in the fourth quarter. Sime Darby booked an MVV land-disposal gain of RM434 million in FY2026, compared with RM901 million in FY2025.
Moving ahead, the diversified automotive and industrial group said business conditions are expected to remain subdued amid geopolitical tensions, supply-chain uncertainties and inflation risks.
"The motors sector continues to be impacted by muted consumer demand and heightened competition," Sime Darby said.
Demand for affordable vehicles in Malaysia, nevertheless, are expected to remain resilient, while medium- to long-term demand from Australia's mining sector for heavy equipment and after-sales services is expected to remain strong, it said.
Through Sime Motors, the group distribute more than 30 automotive brands across 10 Asia-Pacific markets, including BMW, Porsche and BYD. Its Malaysian portfolio includes BMW, MINI, Porsche, Jaguar Land Rover, Hyundai, Volvo, Ford and BYD.
Group chief executive officer Datuk Jeffri Salim Davidson said Sime Darby had come through a challenging financial year but remained operationally well positioned.
"This year was marked by continued uncertainty across several of our key markets, competitive pressures in the automotive sector and softer demand in the resource sector value chain, which affected the industrial business," he said.
"Our diversified portfolio and geographical footprint remain a winning combination for Sime, allowing us to deliver robust results as we navigate market cycles". The group intends to continue building on its relationships with global automotive and industrial brands while defending and expanding its market share, he added.
During the year, Sime Darby saw its China business recording an improvement in its motors segment, while it continued to see higher electric vehicle sales in Singapore and higher overall vehicle sales in Malaysia. Meanwhile, in its industrial business, its Malaysian operations generated improved revenue from data centre deliveries.
Shares of Sime Darby traded three sen or 1.2% lower at RM2.48 at Thursday's midday break, valuing the group at RM16.90 billion. The counter has gained more than 20% year to date.