MALAYSIA’S biggest conglomerate Sime Darby Bhd saw net profit fall 21 per cent in the first quarter ended September 30 2009, dragged by lower crude palm oil (CPO) prices. Net profit was RM684.6 million compared with RM866.9 million in the comparable quarter a year ago. Revenue also decreased to RM7.7 billion from RM8.7 billion a year ago, due to a RM700 per tonne difference in CPO prices. Sime Darby president and group chief executive Datuk Seri Ahmad Zubir Murshid said CPO prices weakened by RM700 a tonne to an average of RM2,245 per tonne in the quarter under review from an average of RM2,962 per tonne in the comparable quarter a year ago. Sime Darby, which is the world’s largest listed plantation company, derives 60 per cent of its income from its 556,000ha plantations in Malaysia and Indonesia, of which 260,000ha are in Indonesia. “However, we are optimistic that CPO prices, which is now at RM2,400 per tonne, will stabilise to between RM2,000 and RM2,200 per tonne for the rest of the year due to strong supply and demand situation. “The colour of our financial report for the rest of the year will be black,” Ahmad Zubir told reporters in Kuala Lumpur yesterday after announcing the group’s financial results. Sime Darby’s Key Performance Index for financial year ending June 2010 is to achieve a targeted net profit of RM2.5 billion and a return on average shareholders funds of 11 per cent. For the quarter under review, Sime Darby’s industrial divison operating profit fell 25 per cent to RM188 million. The motor division, however, turned around to record an operating profit of RM64 million, which is a 73 per cent increase over the same quarter in the previous year, supported by stronger performance in Malaysia and Southeast Asia. The property division registered an operating profit of RM59 million, a 7 per cent decline from a year ago. Energy and utilities division doubled its operating profit to RM66 million mainly due to higher profit from the power and utilities business. Meanwhile, Ahmad Zubir said Sime Darby is talking with several potential partners to set up a bunker and refinery in India, which will be finalised next year. He added that the conglomerate is also open to sell a stake to Chinese investors, subject to the percentage, as it makes business sense and helps strenghen and grow its business in China. “But so far, nobody from China has approached us,” said Ahmad Zubir. Sime Darby has port, water, energy, utility, refinery and bunkering businesses in China. On Liberia, Ahmad Zubir said the group is going upstream starting to plant 10,000ha of oil palm estates as groundwork and has started to clear land to set up nursery. Source : Business Times