Sime to benefit from Caterpillar-Bucyrus deal - Agree

AGREE!

The gain will come from better sales of equipment and parts, lower production cost and improved service

Kuala Lumpur: Sime Darby Bhd, the exclusive distributor for Caterpillar Inc is expected to benefit from Caterpillar's US$8.8 billion (RM27.28 billion) purchase of Bucyrus International Inc.

The gain will come from better sales of equipment and parts, lower production cost and improved service.

Sime Darby executive vice president industrial division Scott William Cameron said there will be a good spillover effect on Sime Darby, especially for its Hasting Deerings operations in Australia.

"With the acquisition of Bucyrus, it will give a positive impact towards Sime Darby especially in Australia and China.

The benefits include higher sales of new equipment and aftermarket parts and support, lower product cost and greater reliability, driven by the use of Caterpillar engines and components in Bucyrus products," Cameron said in an e-mail interview.

He said Sime will benefit from an improved service and lower owning and operating costs, propelled by Caterpillar's global manufacturing, supply chain and purchasing capabilities.

US-based Caterpillar, which is one of the world's leading makers of heavy equipment, completed its Bucyrus purchase last July. Bucyrus produces huge machines and equipment for the mining sector.

New York Stock Exchange-listed Caterpillar said with the deal, it has created a mining equipment group with unmatched product range.

Caterpillar is one of the world's leading manufacturers of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives.

Sime Darby, which is one of Malaysia's largest conglomerates, has six business divisions, namely plantations, property, energy and utilities, industrial, healthcare and automotive.

Sime Darby Industrial Division is the world's fifth largest Caterpillar dealer. It has been distributing Caterpillar products for the past 80 years.

Sime's industrial division registered its highest ever operating profit of RM1.1 billion for the financial year ended June 2011.

The 41 per cent increase over the previous financial year was due to strong sales in Australia/Pacific Islands, China and Malaysia, as well as better price realisations across all regions.