[KUALA LUMPUR] Malaysian conglomerate Sime Darby Wednesday reported a 17 per cent year-on-year fall in net profit in the fourth quarter due to a plunge in commodity prices and poor sales of vehicles and industrial equipment in key markets like China.
The world's largest listed palm oil producer by acreage said net profit for April-June was 988.7 million ringgit (S$327 million), compared with 1.2 billion ringgit in the same quarter last year.
Sime Darby, which is also involved in property and the industrial and hospital sectors, said quarterly revenue rose 2.80 per cent year-on-year to 12.86 billion ringgit.
"The Group continued to be adversely impacted by bearish commodity prices and volatile market conditions in the period under review," its chief executive Bakke Salleh said in a statement.
"Crude palm oil and coal prices have been on a downward trend and the challenging business environment has resulted in subdued demand in most of our business activities, thus culminating in a weaker set of earnings." The price of crude palm oil, which has fallen by about 16 per cent year-to-date, is currently below 2,000 ringgit per tonne.
Plummeting oil and other commodity prices have had a serious impact on Malaysia's growth prospects and government revenues.
The economy grew at its slowest pace in nearly two years in April-June at 4.9 per cent, down from 6.5 per cent in the same period last year, as both exports and private consumption weakened.
For the full financial year, Sime Darby recorded a 2.3 billion ringgit net profit, down 31 per cent from the previous financial year.
The multinational conglomerate said it expects to face major headwinds on the back of an economic slowdown, particularly in China where it operates.
"The challenging business climate is expected to continue amid an environment of economic stagnation... the weak outlook for commodity prices coupled with cautious consumer spending and stricter monetary policies will be some of the major headwinds that the group is expected to face," Sime Darby said.
Malaysia and Indonesia together account for 85 per cent of global palm oil production.