November 25, 2016 / 10:40 AM / a year ago

UPDATE 1-Malaysia's Sime Darby says could list its plantations division

* Asset monetisation exercise long overdue: Group CEO

* Q1 profit rises 37 pct on motors unit strength (Adds CEO comments on IPOs)

By Liz Lee

KUALA LUMPUR, Nov 25 (Reuters) - Malaysian conglomerate Sime Darby Berhad could list its plantation business - the world’s largest palm oil planter by land size - as it looks to monetise assets, its chief executive said on Friday.

The company said earlier this month it had explored potential asset listings and asset monetisation and that execution would depend on timing.

Sime Darby’s top shareholder, government-backed fund management company Permodalan Nasional Bhd, said on Thursday it was considering spin-offs or demergers of its strategic investments, local newspaper The Edge reported.

“It is timely to get this moving, long overdue. We should have done this years ago,” group CEO Mohd Bakke Salleh said on the firm’s asset monetisation plans, in a press briefing following its first-quarter results.

Asked which business Sime Darby wanted to list first, Bakke said: “immediately, the natural choice is the plantations business.”

“Maybe at a later stage, the property division,” he said.

Sime Darby has put its plans to list its motors division in the backburner as business sentiment for the automotive sector is bleak, Bakke said.

Earlier on Friday, the conglomerate posted a 37 percent rise in first-quarter net profit as higher sales of vehicles at home and in Singapore boosted its motors unit and helped offset sluggishness in its plantation business.

Sime Darby posted a profit of 443 million ringgit ($99.33 million) for the quarter ended Sept. 30, compared to 323 million ringgit in the year-ago quarter.

The motors business saw a 53 percent jump in profit before interest and tax to 130 million ringgit.

The plantation division’s profit before interest and tax fell 9.6 percent to 273 million ringgit, mainly due to lower production from the El Nino weather pattern and lower sales volume.

The company’s revenue for the quarter was flat at 10.1 billion ringgit compared with 10.2 billion ringgit in the year-ago period.

The conglomerate also set a net earnings target of 2.2 billion ringgit and a return on average shareholders’ equity target of 6.4 percent for the financial year ending June 30, 2017. ($1 = 4.4600 ringgit) (Reporting by Liz Lee; Writing by A. Ananthalakshmi; Editing by Muralikumar Anantharaman)

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