KUALA LUMPUR (Nikkei Markets) -- Malaysian automotive-to-healthcare conglomerate Sime Darby, which reported a 11% decline in its fiscal second quarter net profit, is looking to sell its entire 30% stake in hypermarket chain Tesco Malaysia, its chief executive said Wednesday.
"There is an on-going sale process right now, orchestrated by Tesco PLC to sell Malaysia and Thailand business," Jeffri Salim Davidson said at a news conference. "Our 30% stake in Tesco is not core to Sime Darby. In the long run, we would exit the business."
In December 2019, Tesco PLC following a strategic review, announced its plan to sell businesses in Thailand and Malaysia, potentially valuing them at $9 billion. But the company stressed that the initiative may not lead to a transaction.
Separately, Sime Darby's chief strategy officer said that the company will continue to sell non-core assets and is currently in advanced talks to sell five such businesses.
"We have a list of assets, buildings, land minority stake that we classified as non-core," Thomas Leong told Nikkei Markets on the sidelines of the earnings conference. "In our overall strategy, one pillar is to rationalize the non-core business, including the E&O."
Although, non-core divestment is an active process, the company is not in a rush, and will wait for optimum price, he added.
Sime Darby, which operates largely in the Asia Pacific and has a significant presence in China, said the coronavirus outbreak would have a significant impact on the group's operations, but has yet to assess it.
Apart from directly affecting demand for motor vehicles, industrial equipment and transport of cargo in China, the disruptions to vehicle and equipment supply chains may also affect the company's sales in other countries, Sime Darby cautioned.
Earlier Wednesday, Sime Darby reported its fiscal second quarter net profit fell to 282.00 million ringgit ($66.51 million) from 317.00 million ringgit in the same quarter last year. Quarterly revenue however rose 8.4% year-on-year to 10.21 billion ringgit from 9.42 billion ringgit.
The company said that it booked 129 million ringgit in deferred tax credit due to change in real property gain tax rates in Malaysia last year.
Shares of Sime Darby fell 0.5% to 1.99 ringgit apiece, while FTSE Bursa Malaysia shed 0.4%.
--Yimie Yong and Gho Chee Yuan