KUALA LUMPUR, Nov 24 — Sime Darby Plantation Bhd’s net profit for the third quarter ended September 30, 2023 (3Q FY2023) surged to RM1.21 billion from RM396 million in the same period a year ago driven by both higher recurring and non-recurring profit before interest and tax (PBIT).
Revenue, however, decreased to RM4.77 billion against RM5.39 billion previously.
In a filing with Bursa Malaysia today, the plantation company said recurring PBIT for the upstream segment increased to RM547 million, an impressive improvement from RM249 million in the previous corresponding quarter, led by the strong recovery of Malaysian operations.
“Major factors driving the higher profits are a 14 per cent increase in fresh fruit bunch (FFB) production to 2.45 million tonnes with Malaysia recording 38 per cent increase year-on-year, the result of intensive rehabilitation efforts, and higher oil extraction rate (OER) which increased from 20.88 per cent to 21.12 per cent.
“The above favourable impact compensated for the decline in crude palm oil (CPO) and palm kernel (PK) average realised prices which were lower by 12 per cent and 11 per cent, respectively,” it said.
Meanwhile, Sime Darby Plantation said the downstream sector reported a PBIT of RM225 million in the current quarter as compared to RM337 million in the previous year’s corresponding quarter affected by lower margins and volume demands in the Asia Pacific operations, although this was partially mitigated by strong results in the European operations.
On prospects, it said commodity prices are expected to remain volatile in the near term due to persistent geopolitical concerns and global macroeconomic uncertainties.
“Although El Nino has not yet caused widespread dryness in Southeast Asia, on a global level, it has contributed to supply concerns as vegetable oil production may be impacted in 2024.
“Whilst demand is expected to grow seasonally in the coming months, high inventory levels in key destinations may limit the offtake upside,” it said.
It said in the long term, commodity prices are expected to remain stable as conventional demand for food and fuel remained strong.
Sime Darby Plantation said it is optimistic of achieving higher fresh fruit bunch production for the full year, largely driven by improvements in labour productivity and field conditions in its Malaysian operations.
It said the company also continued to explore further growth in new and existing markets, particularly via its downstream arm Sime Darby Oils.
For the cumulative nine-month period, Sime Darby Plantation’s net profit eased to RM1.66 billion compared with RM1.93 billion a year ago and revenue slid to RM13.15 billion from RM15.36 billion previously.
In a separate statement, chairman Tan Sri Dr Nik Norzrul Thani Nik Hassan Thani said the company is back on track to deliver a satisfactory performance this year despite a challenging start to 2023.
“I am also thrilled with the strategic partnerships that the company has established recently in China and India, two of our major export countries.
“We are looking forward to unlocking more value with these collaborations as ongoing improvement efforts will ensure that we are able to close the second half of the year on a much stronger footing,” he said.
Meanwhile, group managing director Datuk Mohamad Helmy Othman Basha said after the setbacks suffered between 2020 and mid-2023, the company is seeing the results of months of rehabilitation work with an increased workforce successfully turning around its upstream Malaysia operations in 3Q FY2023.
“We expect to achieve the full complement of harvesters for Sabah and Sarawak by end of the year and by mid-2024, these harvesters will acquire sufficient skills to be more productive.
“We will also continue to localise our workforce as we are no longer recruiting new foreign workers for non-harvesting work,” he added.
The company declared a special interim dividend of 5.70 sen per share for FY2023 on October 27, 2023. — Bernama
