Financial Year Ending 31 December 2019 Results Announcement First Quarter ended 31 March 2019 31 May 2019
2 Change in Financial Year End to 31 December Q1 ENDED QUARTER ENDED 31 MARCH 2019 31 MARCH 2018 Due to the change in the financial year, the performance of the current quarter ended 31 Mar 2019 (Q1 FY2019) is not comparable with the first quarter of the previous financial year ended 30 Jun 2018 (Q1 FY2018). Instead, the performance is comparable against the quarter ended 31 Mar 2018 (QE Mar 2018) i.e. the corresponding quarter of the previous year
3 Financial Highlights Lower earnings attributable to the sharp decline in CPO & PK prices mitigated by improved earnings from Downstream and operational efficiencies Q1 FY2019 QE Mar 2018 YoY % in RM’mn Revenue 3,006 3,659 -18% 180 390 PBIT -54% -50% Recurring PBIT 180 362 - 28 Non-Recurring PBIT PBT 125 352 -64% PATAMI 74 249 -70% Attributable to owners of the Company 74 223 -67% Recurring PATAMI 26 Non-Recurring PATAMI - Basic EPS 1.1 3.7 -70% ( RM’sen ) Recurring EPS 3.3 1.1 - 67 % 0.4 Non-Recurring EPS -
4 Financial Performance by Segment Lower PBIT on the back of weaker Upstream earnings mitigated by higher contribution from Downstream in RM’mn Q1 FY2019 QE Mar 2018 Recurring PBIT YoY % TOTAL PBIT 83 283 Upstream -54% YoY -71% 113 253 -55% Upstream Malaysia 390 180 9 11 28 -18% Upstream Indonesia -19 38 >-100% Upstream PNG/SI 362 -20 -19 Upstream Liberia -5% 180 Downstream 85 65 +31% Others * 12 14 QE Mar 2018 Q1 FY2019 -14% Legend: Recurring Non-Recurring * Others refers to Sime Darby Agri-Bio Sdn Bhd, Sime Darby Research 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 JVs
5 5 Recurring Profits Lower YoY recurring profits wholly due to lower CPO and PK realised prices Q1 FY2019 vs QE Mar 2018 in RM’mn 217 Net positive impact on PBIT 108 -30 -399 28 91 Others P B I T Cost to 20 Higher customer OER Higher FFB ( -8% YoY) Higher (+2% YoY) 579 production Downstream 362 (+8% YoY) results • Lower CPO prices (+31% YoY) 180 realised (-18% YoY) 324 • Lower PK prices 125 realised (-43% YoY) Recurring PBIT QE Mar 2018 Q1 FY2019 before the impact Recurring PBIT Recurring PBIT of CPO/PK prices 148 Net positive impact on PATAMI 88 -31 -13 -297 PATA M I 23 66 Others Higher 15 Cost to Higher interest 371 customer OER Higher FFB expense Higher ( -8% YoY) 223 (+2% YoY) production Downstream 74 (+8% YoY) • Lower CPO prices results realised (-18% YoY) (+31% YoY) 125 QE Mar 2018 Recurring PATAMI Q1 FY2019 • Lower PK prices before the impact Recurring Recurring realised (-43% YoY) of CPO/PK prices PATAMI PATAMI
6 6 Recurring Profits Lower QoQ recurring profit largely due to lower seasonal FFB production Q1 FY2019 vs QE Dec 2018 in RM’mn -57 Net negative impact on PATAMI -10 -51 Lower Downstream PATA M I 16 results 5 -9 (-13% QoQ) 7 1 115 Cost to • Higher CPO prices Others Lower Lower FFB Higher customer realised (+8% QoQ) interest 74 production OER (-2% QoQ) • Lower PK prices expense (-10% QoQ) 58 (+1% QoQ) realised (-10% QoQ) QE Dec 2018 Q1 FY2019 Recurring PATAMI before the impact Recurring Recurring of CPO/PK prices PATAMI PATAMI
7 Borrowings & Gearing Ratios Increased borrowings from RM7.3bn (31 Dec 2018) to RM7.5bn due to lower cash generated from operations as a result of weaker CPO & PK prices realised, mitigated by the stronger RM against USD & EUR 39% 40% 43% 46% 46% Gross RM594mn -RM454mn -RM208mn Gearing 1 NET CASH GENERATED NET CASH USED IN NET CASH USED IN FROM OPERATING INVESTING ACTIVITIES FINANCING ACTIVITIES Net 35% 38% 40% 43% 43% ACTIVITIES Gearing 2 Borrowings as at 31 Mar 2019 increased by RM175mn Borrowings 6,452 6,489 7,159 7,297 7,472 compared to 31 Dec 2018 attributable to: (in RM’mn ) Net loans raised totaling RM304mn attributable to: Lower cash generated from operations 25% 31% 23% Increased working capital funding, given higher 17% 18% inventory balances Internal inventory volume 31 Mar 31 Dec QoQ ( in ‘000 MT) 2019 2018 82% 83% 77% 75% 69% Upstream – CPO 130 117 +11% Upstream – PK 23 24 -4% Downstream – Refined products 225 214 +5% Total 378 355 +6% As at 31 Mar As at 30 Jun As at 30 Sep As at 31 Dec As at 31 Mar This was offset by: 2018 2018 2018 2018 2019 Depreciation of USD and EUR against RM by 2% and 3% Long Term Debt Short Term Debt respectively, resulting in lower borrowings by RM131mn 1 Gross Gearing is based on Total Borrowings divided by Total Equity 2 Net Gearing is based on Total Borrowings less Bank Balances, Deposits & Cash divided by Total Equity
8 Operational Performance – Upstream Higher FFB production driven by productivity improvements in all regions FFB PRODUCTION Malaysia: FFB production was 2% in ‘000 MT (YoY %) higher YoY due to a boost in MALAYSIA INDONESIA productivity with 4% higher YoY hectarage of trees moving into prime +2% maturity (9-14 years) +14% Indonesia: FFB production improved TOTAL by 14% YoY mainly due to more trees UPSTREAM moving into maturity (trees aged 4 1,367 1,399 596 years: 85% higher YoY hectarage) as 523 +8% a result of the accelerated replanting QE Mar 18 Q1 FY19 QE Mar 18 Q1 FY19 activities carried out in the preceding years 2,521 2,339 PNG/SI LIBERIA PNG/SI: FFB production increased by 17% YoY as it recovers from the low harvest in 2017 +17% +33% QE Mar 18 Q1 FY19 Liberia: FFB production was 33% higher YoY attributable to the 16 12 continuous efforts to improve 510 437 operational efficiencies QE Mar 18 Q1 FY19 QE Mar 18 Q1 FY19
9 Operational Performance – Upstream Improved OER largely attributable to the Malaysian and Indonesian operations CPO EXTRACTION RATE (OER) in % (YoY %) Malaysia: OER improved by 3% YoY as a result of efficient MALAYSIA INDONESIA crop evacuation on the back +3% of favourable weather +1% conditions TOTAL Indonesia: OER was higher by UPSTREAM 21.98 21.79 21.09 20.48 1% YoY due to crop quality +2% improvements with better QE Mar 18 Q1 FY19 QE Mar 18 Q1 FY19 agriculture management PNG/SI : OER was lower by 21.41 21.03 PNG/SI LIBERIA 2% YoY attributable to the rainy season experienced in -2% +19% QE Mar 18 Q1 FY19 West New Britain Liberia: OER was 19% higher YoY due to improving age 22.00 21.52 21.63 18.12 profile QE Mar 18 Q1 FY19 QE Mar 18 Q1 FY19
10 Operational Performance – Upstream The performance was affected by weaker CPO prices realised which are expected to remain subdued under the current challenging external environment AVERAGE CPO PRICE REALISED in RM/MT (YoY %) MALAYSIA INDONESIA -19% -12% TOTAL UPSTREAM 2,270 2,002 2,480 1,998 -18% QE Mar 18 Q1 FY19 QE Mar 18 Q1 FY19 PNG/SI 2,452 LIBERIA 2,012 -22% -5% QE Mar 18 Q1 FY19 2,644 2,181 2,070 2,063 QE Mar 18 Q1 FY19 QE Mar 18 Q1 FY19
11 11 Impact of lower average CPO and PK prices realised on our profit Q1 FY2019 QE Mar 2018 YoY % IMPACT ON PBIT IMPACT ON PATAMI in RM’mn -50% YoY -67% YoY 182 399 362 Recurring Profit 223 149 297 180 74 QE Mar 18 Q1 FY19 QE Mar 18 Q1 FY19 Impact of lower Impact of lower average CPO & average CPO & PK prices realised PK prices realised CPO * 1,998 2,480 -19% 156 118 PK * 1,322 2,145 70 53 -38% MALAYSIA CPO * 47 35 -12% 2,002 2,270 PK * 994 1,861 -47% INDONESIA 34 26 CPO * 91 64 2,063 2,644 -22% PNG/SI CPO * 2,070 2,181 -5% 0 0 LIBERIA PK * 337 1,169 -71% 1 1 THE IMPACT OF LOWER AVERAGE CPO & PK PRICES REALISED 399 297 Note: * Average selling price realised (in RM/MT palm product)
12 Financial Performance – Downstream Stronger PBIT driven by higher earnings from bulk products, differentiated products and trading operations Recurring PBIT in DOWNSTREAM RM’mn (YoY %) Performance from the bulk products business was 83% higher YoY largely +31% due to higher sales volume and better margins resulting from: Favourable import duties in India 85 65 Zero export levies in Indonesia since Dec 2018 * QE Mar 18 Q1 FY19 Differentiated operations across APAC DIFFERENTIATED BULK TRADING experienced increased margins this quarter, compensating the weaker +6% +83% +29% contribution from the differentiated products segment in EMEA PBIT for the trading operations 38 36 33 18 18 improved by 29% YoY due to higher 11 trading volume with better margins QE Mar 18 Q1 FY19 QE Mar 18 Q1 FY19 QE Mar 18 Q1 FY19 APAC – Asia Pacific EMEA – Europe, the Middle East and Africa * After deducting corporate expenses of RM4 million registered in Q1 FY2019
13 Operational Performance – Downstream Higher sales volume and increased margins driven by the bulk products business, particularly in Indonesia in % PRODUCT RATIO 50 61 Increase in bulk products driven by our 50 39 Indonesian operations on the back of higher demand and better margins QE Mar 18 Q1 FY19 Differentiated Bulk in % CAPACITY UTILISATION 70 68 Capacity utilisation improved on the back of higher demand for bulk products QE Mar 18 Q1 FY19 +11% in ‘000 MT SALES VOLUME (YoY %) Sales volume was 11% higher compared to 893 QE Mar 2018 attributable to the bulk 803 products business, particularly in Indonesia QE Mar 18 Q1 FY19
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