Sime Darby targets 10% growth

KUALA LUMPUR: Sime Darby Bhd, formerly Synergy Drive Bhd, is confident of achieving a conservative 10% top and bottom line growth annually from 2008, said its president and group chief executive officer Datuk Seri Ahmad Zubir Murshid.

He said Sime Darby would be able to realise between RM400 million and RM500 million annually over the next three years from the synergies of merging Sime Darby Bhd, Kumpulan Guthrie Bhd and Golden Hope Plantations Bhd groups of companies.

Speaking to reporters after the launch of the company and the unveiling of its new corporate logo here yesterday, Zubir said Sime Darby was retained as the brand for the merged group as it was recognised globally and had equity value.

He said the enlarged entity would dispel the notion that it focused mainly on plantations and property, and demonstrate its leading positions in the other sectors it was involved in, namely energy and utilities, motor distributorship and heavy equipment.

Zubir said the much-debated Bakun dam project was a viable venture and would generate recurring income from 2013.

On financing the Bakun dam, he said it had various options and details would be revealed when negotiations with the government were concluded. On whether the dam project would drain its finances given the long gestation period, he said the group’s multiple core businesses would help sustain its operations as a whole.

“With the revenue and cash reserve we have, that will help mitigate some of the concerns. On top of that, we believe strongly that the integration of the plantations would generate more cash by improving our yields,” he said.

Asked of its cash reserve, he said: “We have always been conservative in terms of cash reserves, so I can only tell you that it is quite healthy.”

“We have been a very low gearing company; that is because when we invest, we look at criteria in investment. We have been very prudent investors.”

On its plans, he said Sime Darby would be investing in some of the projects in the Northern Corridor Economic Region (NCER) in line with its core business activities.

On whether it would form an alliance with Proton Holdings Bhd, Zubir said: “We are looking at the premium end in the motor business sector. This year alone we have done a lot of restructuring in our motor division (and) I believe we have turned around our motor division. So I don’t think we will take on anymore task at the moment.”

Asked to comment on analysts’ view that Sime Darby, not being a pure plantation player, would lower its valuation, Zubir said it was a conglomerate of multiple businesses where plantation accounted for 47% of total revenue.

“There is a potential of more than 50% that is non-plantation, and if the core value is considered, these products and businesses are strong in each of the sector. There are many conglomerates with multiple portfolios,” he said.

On its impending listing tomorrow, Zubir said the company would be able to make a strong comeback with investors’ support and positive market sentiment on Sime Darby.

“I look forward to the re-listing of the group. We have been off the radar screen for some time and definitely we are excited. We want to see where we are and see the confidence of the investors.”

To a question if Sime Darby would be spinning off some of its divisions, he said it was currently integrating the businesses with the next review in the year 2010, and that it depended on whether the divisions met their targets.

Prime Minister Datuk Seri Abdullah Ahmad Badawi, who described the entity as a new Malaysian icon, launched the company and its logo.

“We are witnessing today the birth of a new corporate giant. The merged entity will not be starting from ground zero, but will emerge fully formed, strong and fighting on all fronts,” he said.

By The EDGE MALAYSIA