KUALA LUMPUR, Feb 22 — Sime Darby Plantation Bhd (SDP) expects crude palm oil prices to average between RM3,700 and RM3,900 per tonne this year amid the El Niño and La Nina challenges.

Group managing director Datuk Mohamad Helmy Othman Basha said the average CPO price could hit as high as RM4,000 tonne per year, while stressing that El Niño and La Nina are normal phenomenon occurrences in the country.

“There will be floods and flash floods here and there just like last year and previous years,” he told reporters during a virtual presentation in conjunction with its fourth quarter results released today.

Commenting on its fresh fruit bunches (FFB) yield, he said that the average FFB yield of oil palm of the company stood at 16.7 tonnes compared with the average yield of between 21.0 tonnes to 22.0 tonnes per hectare.

“The current 16.7 tonnes is below what is normal for us, because our normal yield is 21.0 tonnes to 22.0 tonnes. We are hoping this year will be close to that number and next year will be at that number or higher,” he added.

He said there are factors in addition to workers, such as replanting, yield profile, weather climate that affect the yield.

“As far as we are concerned the replanting will continue and that should be able to give us higher yield,” he said.

On its capital allocation, Mohamad Helmy said the company allocated RM900 million for the year for replanting purpose and RM1.5 billion for other purposes including new projects.

“Generally, SDP aims to replant 50,000 hectares out of our total 600,000 hectares of planted areas annually,” he said.

SDP’s net profit eased by 25 per cent to RM1.86 billion in the financial year ended Dec 31, 2023 (FY 2023) from RM2.49 billion in FY 2022, mainly due to lower recurring profit before interest and tax (PBIT) and higher finance costs, partially mitigated by the higher non-recurring PBIT.

SDP said finance costs increased by 47 per cent due to higher benchmark lending rates but were partially mitigated by six per cent lower average borrowings.

It said the average interest rate stood at 5.4 per cent per annum compared to three per cent per annum in the previous corresponding period.

Revenue also declined to RM18.43 billion against RM21.03 billion previously, it said in a filing with Bursa Malaysia today. — Bernama