FY2017/2018 Results Announcement Second Quarter ended 31 December - PowerPoint PPT Presentation

FY2017/2018 Results Announcement Second Quarter ended 31 December 2017 22 February 2018

Financial Highlights Strong financial position in the first half of FY2018 2QFY2018 1HFY2018 in RM’mn (YoY %) 4,085 7,626 +4% +13% Revenue 2QFY17: 3,925 1HFY17: 6,744 673 1,957 +18% +118% PBIT 2QFY17: 570 1HFY17: 899 Recurring PBIT 673 1,186 Non-Recurring PBIT 1 - 771 +35% +168% 637 1,876 PBT 2QFY17: 472 1HFY17: 699 +34% +208% 429 1,448 PATAMI 2QFY17: 319 1HFY17: 470 Recurring PATAMI 429 677 - 771 Non-Recurring PATAMI 1 6.3 21.3 2 2 +34% +209% Basic EPS 2QFY17: 4.7 1HFY17: 6.9 ( RM’sen ) 1 Non-recurring refers to the gain on sale of land to SD Property of RM676mn and reversal of accrual for donation of RM95mn in 1QFY2018 2 2 Higher weighted average number of ordinary shares post-listing of Sime Darby Plantation

Borrowings & Cash Flow Lower gearing resulting from borrowings reduction initiatives and higher cash flow Gross 61% 55% 44% BORROWINGS REDUCTION Gearing 1 initiatives in 2QFY2018 Net 57% 48% 39% Gearing 2 Proceeds from the disposal of the  redeemable loan stock 9,300 8,815 7,214 Borrowings (in RM’mn ) Settlement of intercompany loans via:  17% 12% 14% 19% 20% Internally generated funds o Capitalisation of intercompany loans 69% 69% 80% o As at 30 Jun 2017 As at 30 Sep 2017 As at 31 Dec 2017 in RM’mn CASH FLOW in 1HFY2018 +225% YoY  Higher Net Cash Generated From Operating 1,177 362 Activities supported by greater earnings 1HFY17 1HFY18 +70%  Lower Net Cash Used In Investing Activities YoY as a result of replanting and replacement capex, offset 1HFY17 1HFY18 by the sale of redeemable loan stock -190 -642 -263%  Higher Net Cash Used In Financing Activities 609 YoY due to repayment of borrowings 1HFY17 1HFY18 1HFY17 1HFY18 -995 3 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 & Cash Balances divided by Total Equity

Financial Performance by Segment Robust Upstream contributions driven by the Malaysian and PNG/SI operations 2QFY2018 1HFY2018 PBIT in RM’mn (YoY %) 1 577 1,785 Upstream +25% +147% 2QFY17: 459 1HFY17: 722 Upstream 1 414 1,490 +127% +271% Malaysia 2QFY17: 182 1HFY17: 402 Upstream 144 261 -48% -18% Indonesia 2QFY17: 275 1HFY17: 318 Upstream 39 77 +129% +166% PNG/SI 2QFY17: 17 1HFY17: 29 Upstream -20 -43 -33% -59% Liberia 2QFY17: -15 1HFY17: -27 64 134 Downstream -41% -26% 2QFY17: 108 1HFY17: 182 32 38 Others >+100% >+100% 2QFY17: 3 1HFY17: -5 4 1 Results include the non-recurring gain on sale of land to SD Property of RM676mn and reversal of accrual for donation of RM95mn in 1QFY2018

Operational Performance – Upstream Commendable performance from Malaysia offset by weaker contribution from Indonesia i n ‘000 MT (YoY %)  Overall: Higher production TOTAL MALAYSIA INDONESIA as it recovers from the El UPSTREAM +26% +25% -24% -5% P R O D U C I T O N Nino impact 3,248 1,509 1,694 935 710 1,435 +2% +12% 2,601  Malaysia: FFB production 5,457 1,342 improved as a result of 4,872 sustained efforts to improve 2,762 2,719 2QFY17 2QFY18 1HFY17 1HFY18 2QFY17 2QFY18 1HFY17 1HFY18 yield via: PNG/SI LIBERIA o Replanting -22% -1% +404% +361% F F B o Superior planting 757 746 439 342 29 material 15  Indonesia: Lower 6 3 production largely due to 2QFY17 2QFY18 1HFY17 1HFY18 2QFY17 2QFY18 1HFY17 1HFY18 2QFY172QFY18 1HFY171HFY18 floods in certain areas in Sumatra and Kalimantan, in MT/ha (YoY %) TOTAL which hindered MALAYSIA INDONESIA productivity , as harvesting UPSTREAM +25% +26% -20% +0% rounds increased 12.83 8.91 8.91 +0.6% +12% 6.59 5.52 5.27 10.15 4.41  PNG/SI: FFB production in 10.89 F F B Y I E L D 9.69 certain areas of PNG was affected by the dry period 2QFY17 2QFY18 1HFY17 1HFY18 2QFY17 2QFY18 1HFY17 1HFY18 in Jun- Sep’17 5.41 5.44 PNG/SI LIBERIA  Liberia: >+100% increase -23% -3% +118% +98% in production due to: 10.07 9.76 3.12 5.84 4.47 o Increased age profile 1.61 1.57 0.74 of the planted area o Innovative water 2QFY17 2QFY18 1HFY17 1HFY18 2QFY17 2QFY18 1HFY17 1HFY18 2QFY172QFY18 1HFY171HFY18 5 management

Operational Performance – Upstream Lower overall CPO Extraction Rate (OER) mitigated by slight improvement in Indonesia CPO EXTRACTION RATE  Overall: OER dropped YoY as a result of poor in % (YoY %) crop quality TOTAL MALAYSIA INDONESIA  Malaysia: Lower OER UPSTREAM due to: -2% -3% +4% +2% o Reduced weevils 20.59 21.12 21.87 21.18 21.60 -1% -2% 20.7920.21 20.21 population o Rain interference 21.28 21.00 21.2920.96 o Extended harvesting intervals due to high crop 2QFY172QFY18 1HFY17 1HFY18 2QFY172QFY18 1HFY17 1HFY18  Indonesia: OER experienced a recovery PNG/SI LIBERIA post-El Nino -2% -1% -0.4% +1% 23.2422.71 22.89 22.70  PNG/SI: Heavy rainfall 21.11 21.03 20.64 20.82 in certain areas of PNG caused a decline in OER 2QFY17 2QFY18 1HFY17 1HFY18 2QFY172QFY18 1HFY17 1HFY18 2QFY172QFY18 1HFY17 1HFY18

Operational Performance – Upstream Lower average CPO price realised on the back of subdued sentiment AVERAGE CPO PRICE REALISED in RM/MT (YoY %) TOTAL MALAYSIA INDONESIA UPSTREAM -8% -5% -5% -1% -6% -2% 2,851 2,717 2,706 2,743 2,763 2,703 2,580 2,533 2,835 2,739 2,672 2,654 2QFY17 2QFY18 1HFY17 1HFY18 2QFY17 2QFY18 1HFY17 1HFY18 PNG/SI LIBERIA -9% +8% -8% -4% 2,961 2,815 2,713 2,701 2,499 2,275 2,072 2,243 1HFY17 1HFY18 2QFY17 2QFY18 2QFY17 2QFY18 1HFY17 1HFY18 2QFY17 2QFY18 1HFY17 1HFY18 7

Financial Performance – Downstream Lower profit largely due to weaker contribution from Bulk business in RM’mn (YoY %) D O W N S T R E A M Downstream PBIT -41% -26% declined due to: Weaker contribution  from Bulk business 182 P B I T 108 as a result of: 134 64 o Higher negative cost of oil cycle 2QFY17 2QFY18 1HFY17 1HFY18 o Appreciation of in RM’mn (YoY %) the Ringgit impacting bulk Bulk Differentiated Trading refining margin S E G M E N T -82% -45% +32% -12% -38% -17% P B I T B Y negatively 74 73 65 56 Changes in levy  41 40 35 31 29 21 13 structure in India 10 2QFY17 2QFY18 1HFY17 1HFY18 2QFY17 2QFY18 1HFY17 1HFY18 2QFY17 2QFY18 1HFY17 1HFY18 8

Operational Performance – Downstream Continuous efforts to manage cost and improve margins Product Ratio Differentiated-to-Bulk 53% 53% product ratio improved, 59% 61% driven by higher sales of specialty products 47% 47% 41% 39% with better contribution 2QFY17 2QFY18 1HFY17 1HFY18 margins Differentiated Bulk Led to increased  utilisation of our Sales Volume (‘000 MT) specialty -1% +6% refineries YoY YoY Lower processing  cost 1,724 909 896 1,628 2QFY17 2QFY18 1HFY17 1HFY18 9

Sustainability SDP continues to adopt the commitments made in the RAC and HRC R S P O R E S P O N S I B L E C E R T I F I C A T I O N A G R I C U L T U R E S T A T U S C H A R T E R ( R A C ) 97% A summary of commitments made by SDP through multiple initiatives, focused on: Human rights & social  RSPO-certified development As at 31 Dec 2017 The environment  Corporate integrity  MALAYSIA 100% H U M A N R I G H T S C H A R T E R ( H R C ) INDONESIA 96% Sime Darby launched it’s Human Rights Charter to articulate its commitment in respecting human rights in line with the United Nations Guiding Principles on PNG & SI Business and Human Rights 100% 10

Strategic Initiatives On-track to deliver value WATER REPLANTING R&D MECHANISATION MANAGEMENT  Ongoing water  Lower  Scale up of 5 - 7% management manpower Genome Select projects in requirement oil palm Replanting Rate Malaysia, and increase plantings Indonesia and productivity (>1,000 ha Liberia to to be  Recently rolled 10 yrs mitigate the planted) out in Indonesia effect of El Nino and Liberia  Testing of new and La Nina Target FY2025 palm traits Average Age Micro Sprinkler  Scale up of enzymatic 12.8 yrs extraction process to YTD FY2018 increase OER Water Reservoirs Average Age in mills (FY16 Average Age: 13.1 yrs) 11

Value Creation Establishment of the Execution Office to intensify value creation execution engine EXECUTION OFFICE  Drive execution and de-bottleneck key initiatives  Track progress on value creation initiatives  Assess and monitor on weekly basis and ensure accountability across all stakeholders PROGRESS TO DATE VALUE PROGRAM REGULAR FINANCIAL CREATION RHYTHM & MANAGEMENT ALIGNMENT TARGETS PLATFORM PROCESSES GREATER CLARITY & GRANULAR ALIGNMENT ON IMPROVE TRACKING SUSTAINED WEEKLY BREAKDOWN OF BUDGETING GAPS EFFICIENCY & MEETINGS TO DRIVE TARGETS ACROSS TOWARDS FY2022 MANAGE VALUE EXECUTION WORK STREAMS CREATION PROGRESS 12