FY2017/2018 Results Announcement Fourth Quarter ended 30 June 2018 30 August 2018
2 Financial Highlights Weaker performance due to lower non-recurring net gains, partially mitigated by lower finance costs 4QFY2018 FY2018 in RM’mn (YoY %) 3,084 14,369 Revenue FY17: 14,779 (-3%) 4QFY17: 3,686 (-16%) 189 2,536 PBIT 4QFY17: 2,834 (-93%) FY17: 4,455 (-43%) 472 2,019 Recurring PBIT 4QFY17: 606 (-22%) FY17: 2,227 (-9%) -283 517 Non-Recurring PBIT 4QFY17: 2,228 (>-100%) FY17: 2,228 (-77%) 149 2,377 PBT 4QFY17: 2,722 (-95%) FY17: 4,031 (-41%) 30 1,727 PATAMI 4QFY17: 2,628 (-99%) FY17: 3,507 (-51%) Attributable to owners of the Company 313 1,236 Recurring PATAMI 4QFY17: 400 (-22%) FY17: 1,279 (-3%) -283 491 Non-Recurring PATAMI 4QFY17: 2,228 (<-100%) FY17: 2,228 (-78%) 1 Basic EPS 0.4 25.4 FY17: 51.6 (-51%) 4QFY17: 38.6 (-99%) ( RM’sen ) 4.6 18.2 Recurring EPS 4QFY17: 5.8 (-22%) FY17: 18.8 (-3%) -4.2 7.2 Non-Recurring EPS 4QFY17: 32.8 (<-100%) FY17: 32.8 (-78%) 1 Based on weighted average number of ordinary shares post-listing of SD Plantation
3 Non-Recurring Items Lower PBIT arising from non-cash impairment charges recognised 4QFY2018 4QFY2017 YoY FY2018 FY2017 YoY in RM’mn 472 606 -22% 2,019 2,227 -9% Recurring PBIT -283 2,228 517 2,228 -113% -77% Non-Recurring PBIT -202 -202 -112 -112 Non-cash impairment of assets in Liberia Non-cash impairment of Verdezyne Inc’s -157 -157 carrying value 118 Gain on sale of land in Melaka -68 Non-cash impairment of rubber asset in Indonesia 676 Non-cash gain on sale of land to SD Property 95 Write-back of donation to Yayasan Sime Darby -14 -35 Others 2,469 2,469 Non-cash gain on sale of MVV land to SD Berhad -39 -39 Share of non-cash impairment losses of Emery Oleochemicals Total PBIT 189 2,834 2,536 4,455 -93% -43%
4 Borrowings & Cash Flow Finance costs in FY2018 were 61% lower than FY2017 as a result of lower borrowings arising from the restructuring of intercompany debts at the point of the demerger and the repayment of loans (RM1,397mn) in FY2018 61% 55% 44% 39% 40% Gross RM2,675mn Gearing 1 NET CASH GENERATED FROM OPERATING ACTIVITIES Net 57% 48% 39% 35% 38% 30 June 2017: RM3,292mn (-19% YoY) Gearing 2 RM-884mn Borrowings 9,300 8,815 7,214 6,452 6,489 NET CASH USED IN INVESTING ACTIVITIES (in RM’mn ) 30 June 2017: RM-1,578mn (-44% YoY) 16% 12% RM-2,091mn 14% 19% 20% NET CASH USED IN FINANCING ACTIVITIES 17% 18% 30 June 2017: RM-1,673mn (+25% YoY) Gearing as at 30 June 2018 declined compared to 70% 69% 80% 82% 83% the same period last year Lower finance costs at RM183mn in FY2018 (FY2017: RM472mn) given lower average interest As at 30 Jun As at 30 Sep As at 31 Dec As at 31 Mar As at 30 Jun rates on borrowings of 2.84% in FY2018 (FY2017: 2017 2017 2017 2018 2018 3.54%) and lower borrowings by 30% YoY at Long Term Debt Short Term Debt Intercompany Loans RM6,489mn in FY2018 (FY2017: RM9,300mn) 1 Gross Gearing is based on Total Borrowings (including intercompany loans) divided by Total Equity 2 Net Gearing is based on Total Borrowings (including intercompany loans) less Bank Balances, Deposits & Cash divided by Total Equity
5 Financial Performance by Segment A decline in recurring PBIT due to lower profit contribution from the Upstream operations, partially mitigated by better earnings from the Downstream operations 4QFY2018 FY2018 Recurring PBIT in RM’mn (YoY %) 403 1,699 Upstream 4QFY17: 620 (-35%) FY17: 2,011 (-16%) 243 1,214 Upstream Malaysia 4QFY17: 380 (-36%) 4QFY17: 1,199 (+1%) 92 364 Upstream Indonesia 4QFY17: 47 (+96%) 4QFY17: 503 (-28%) 77 192 Upstream PNG/SI 4QFY17: 219 (-65%) 4QFY17: 429 (-55%) -9 -71 Upstream Liberia 4QFY17: -26 (+65%) 4QFY17: -120 (+41%) 68 267 Downstream 4QFY17: 7 (>+100%) FY17: 232 (+15%) 1 53 1 Others 4QFY17: -21 (>+100%) FY17: -16 (>+100%) 1 Others refers to Sime Darby Agri-Bio Sdn Bhd, Sime Darby R esearch Sdn Bhd, Sime Darby Technology Sdn Bhd, Sime Darby Biotech Lab Sdn Bhd, Sime Darby Seeds Sdn Bhd, as well as investment holding companies, associates and joint ventures
6 Operational Performance – Upstream FFB production in FY2018 grew 5% YoY due to the achievement of the strongest yield performance in Malaysia in the last 5 years FFB PRODUCTION FFB production in Malaysia grew in ‘000 MT (YoY %) 10% YoY in FY2018 on the back of INDONESIA TOTAL MALAYSIA sustained yield improvement efforts coupled with young mature UPSTREAM -14% +10% +26% -2% palms entering their peak 5,293 5,822 -1% +5% 2,672 2,615 production 1,411 In Indonesia , FFB production was 10,233 1,208 657 521 marginally lower in FY2018 as a 9,784 result of accelerated replanting, on 4QFY17 4QFY18 FY17 FY18 4QFY17 4QFY18 FY17 FY18 the back of lower average mature ha of 159,436 in FY2018 (FY2017: 166,659 mature ha) 2,462 2,437 PNG/SI LIBERIA FFB production in PNG/SI in +7% -3% +53% +141% FY2018 was affected by weather abnormalities during the period, such as: 1,792 1,731 65 515 549 27 23 Extremely high rainfall in West 15 New Britain and very dry 4QFY17 4QFY18 FY17 FY18 4QFY174QFY18 FY17 FY18 4QFY17 4QFY18 FY17 FY18 period in Ramu
7 Operational Performance – Upstream Marginally lower overall OER in FY2018 in Malaysia and PNG/SI CPO EXTRACTION RATE (OER) in % (YoY %) OER in Malaysia was INDONESIA TOTAL MALAYSIA weaker by 1% YoY in FY2018 UPSTREAM +2% -1% +0.4% -3% as a result of the increase in young mature area with 21.30 21.39 -0.2% -1% 20.3420.79 20.56 20.40 21.25 20.64 low oil to bunch ratio 21.29 21.18 21.14 OER in PNG/SI was weaker FY17 FY18 4QFY17 4QFY18 FY17 FY18 4QFY17 4QFY18 21.02 by 3% YoY in FY2018 on the back of weather related PNG/SI issues such as extended LIBERIA intervals, crop quality and -4% -3% +29% +10% delay in crop evacuation, 23.17 22.33 19.4025.06 23.10 22.41 among contributing factors 18.81 20.60 4QFY174QFY18 4QFY17 4QFY18 FY17 FY18 FY17 FY18 4QFY17 4QFY18 FY17 FY18
8 Operational Performance Lower average CPO price realised due to weaker market sentiment AVERAGE CPO PRICE REALISED in RM/MT (YoY %) TOTAL INDONESIA MALAYSIA UPSTREAM -14% -8% -21% -13% -15% -11% 2,823 2,415 2,764 2,825 2,588 2,721 2,408 2,161 2,848 2,813 4QFY17 4QFY18 FY17 FY18 4QFY17 4QFY18 FY17 FY18 2,546 2,379 LIBERIA PNG/SI -10% -13% -4% -8% 3,047 2,893 2,590 2,652 2,413 2,221 2,292 2,203 4QFY17 4QFY18 FY17 FY18 4QFY17 4QFY18 FY17 FY18 4QFY17 4QFY18 FY17 FY18
9 Financial Performance – Downstream Higher PBIT in FY2018 driven by better earnings from the differentiated products business PBIT BY SEGMENT DOWNSTREAM PBIT in RM’mn DIFFERENTIATED >+100% YoY >+100% YoY >+100% YoY +15% YoY 153 76 51 -14 FY17 FY18 267 4QFY17 4QFY18 232 68 7 BULK -93% YoY -54% YoY 4QFY17 4QFY18 FY17 FY18 126 58 Downstream PBIT strengthened in FY2018 driven by better 14 1 earnings from: FY17 FY18 4QFY17 4QFY18 The differentiated products business due to higher sales volume, improved contribution margin , and TRADING higher capacity utilisation >+100% YoY +87% YoY The trading business taking advantage of the CPO price 56 30 16 volatility 7 This was offset by lower contribution from the bulk business FY17 FY18 4QFY17 4QFY18 due to higher negative cost of oil cycle
10 Operational Performance – Downstream Continuous efforts to drive various operational initiatives to manage cost and improve margins Capacity Utilisation (%) Product Ratio Product ratio continues to move towards higher +31% +9% contribution from the 52 52 58 64 differentiated segment in FY2018 48 48 42 76 77 36 70 59 As a result, capacity 4QFY17 4QFY18 FY17 FY18 utilisation and sales Differentiated Bulk FY17 FY18 4QFY17 4QFY18 volume increased in FY2018 on better 1 Savings ( RM’mn ) LSS Sales Volume (‘000 MT) contribution by -2% +5% -34% +19% specialty refineries LSS savings grew by 19% YoY in FY2018 due to 174 3,434 3,280 80 67 874 858 41 projects harvested during 27 the period 4QFY17 4QFY18 FY17 FY18 FY17 FY18 4QFY17 4QFY18 1 LSS – Lean Six Sigma
11 The acquisition of 100% Equity Interest in Markham Farming Company Limited (MFCL) STRATEGIC RATIONALE The oil palm plantation is strategically located close to Lae, PNG’s largest port, MFCL is a private limited company incorporated in and has the ability to integrate with SD PNG which owns: Plantation/NBPOL’s existing supply 6,110 ha of agriculture land in Markham Valley, chain . PNG, comprising 2 estates – Munum (1,733 ha) MFCL is the largest coconut oil exporter and Erap (4,377 ha). Average age profile of the oil palm trees is in PNG and the acquisition enables SD Plantation/NBPOL to expand its lauric ~18 months. oils business into coconut oil 2 copra mills in Buka and Madang, PNG with a production, captive for its refining total combined copra throughput capacity of blends in Europe. 55,000 MT per annum.
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