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UPDATE 2-Malaysia's Sime full-yr profit rise beats forecast

(Recasts with news conference, detail)

By Patrick Chalmers

KUALA LUMPUR, Aug 27 (Reuters) - Asia's oldest conglomerate, Sime Darby Bhd , beat market forecasts with its full-year results on Tuesday, the diversified Malaysian firm posting a 25 percent rise in net profits fuelled by a strong home market.

Sime said its variety of interests -- which span property, car distribution, power generation, tyre manufacturing, and plantations -- helped to ward off weakness in key countries.

"We are quite pleased with the result," Sime Darby Group Chief Executive Nik Mohamed Yaacob told a news conference.

"It was achieved during a period of considerable uncertainty brought about by the September 11 event," he added.

Net profit of 771 million ringgit ($203 million) came despite recessions in Hong Kong and Singapore, markets that have yielded 30 percent of group profits in the past, Nik Mohamed said.

The figure for the year to June 30 trumped the 728 million ringgit predicted by Multex Global Estimates, helped by better-than-expected results from property and car distribution units as well as continued buoyancy in crude palm-oil prices.

Sime reported earnings per share of 33.2 Malaysian cents versus the forecast 31.3, on a modest increase in full-year turnover to 12 billion ringgit versus the previous financial year's 11.8 billion.

Motor vehicle distribution, which accounted for a third of the group's annual turnover, saw profits fall due to lower vehicle demand in Malaysia and Singapore, Sime said.

But higher sales of BMW vehicles by Sime unit Tractors Malaysia Holdings Bhd unit and contributions from the group's new Peugeot distributorship in Australia helped a satisfactory performance by the sector, the statement added.

BMW TALKS UNRESOLVED

Nik Mohamed said negotiations continued with BMW over Malaysian wholesaling rights, whose loss he said in May would lead to a substantial loss in margins.

Sime also distributes Ford cars in Malaysia, Hong Kong and Singapore, and Mitsubishi and Nissan vehicles in China.

Property interests chipped in 246 million ringgit in pre-tax annual profits on revenues of just 560 million, with a large share coming from local unit Sime UEP Properties .

Singapore's marine and shipbuilding industry boosted the group's heavy-equipment sales in the fourth quarter, offsetting weak demand for logging equipment in Malaysia, where sales in the marine and cogeneration sectors also helped it out.

Heavy-equipment sales made up a fifth of group turnover and contributed 230 million ringgit in annual profit before tax.

Sime's plantations division, accounting for only eight percent of annual revenue, profited from higher palm-oil product prices in the fourth quarter, averaging 1,211 ringgit per tonne of palm oil versus 1,113 in the quarter before.

Palm kernel prices also rose over the period to 642 ringgit per tonne from 545 ringgit.

TOO SOON FOR BAKUN NUMBERS

Looking ahead, Nik Mohamed said it was too soon to predict what revenues would accrue from the contract it won last week to build the long delayed Bakun dam in Sarawak.

"We are not in a position to tell you what the possible profit margins will be," he said, adding that finalisation of the contract would apportion work from the 1.8 billion ringgit bid.

"We need the next few weeks to iron out all the details."

Sime led a consortium including a Chinese infrastructure firm to win the main construction work in the $2.4 billion project.

Shares in Sime, the country's sixth largest company by market value, were suspended at 5.25 ringgit ahead of the results, stuck in their range for the year of between 4.72 and 5.60.

($1 = 3.8 ringgit)

(Kuala Lumpur newsroom +603 2275-6846, Fax +603 2072-6752 [email protected]))