Conglomerate Sime Darby today said that its third quarter earnings fell sharply due to the global uncertainties created by the Iraq war and fears over terrorist attacks.

Net profit in the three months to March dropped 18 percent to RM148.24 million from the previous quarter as an improvement at the plantation and energy arms was offset by weaker contributions from most other divisions.

Sime Darby said it expected these trends to continue through its fourth quarter to June, with margins in the auto distribution segment hit by the upturn in the euro and a lowering of duties o­n tyres under the Asean Free Trade Area (Afta) in January, and the continuing fallout from the war in Iraq.

At the same time, the impact of Sars o­n the business will be felt, it added.

Strong palm price

For the full-year to June, the company said results should be satisfactory, thanks to strong palm product prices and measures to ease competitive pressure in the region.

In the nine months to March, net profit rose marginally to RM568.72 million from a year earlier o­n the back of a 15 percent increase in sales to RM10.16 billion.

Sime Darby said the plantations division maintained profitability in the March quarter as crude palm oil prices averaged RM1,560 a tonne, up from RM1,453 at the end of 2002.

The company said the Iraq war had hit tyres sales in the region and boosted costs as prices of natural and synthetic rubber rose and insurers charged higher war risk premiums. At the same time, severe price competition added to the pressure.

The heavy equipment distribution business saw lower sales as demand eased in the Australian coal mining industry, the Hong Kong market remained weak with major infrastructure projects suspended and the China market, while promising, remained a major challenge. AFP