Sime Darby Plantation’s pretax profit plunges on lower CPO prices

Sime Darby Plantation’s sharp fall in profitability was attributable to lower average CPO and palm kernel prices.

PETALING JAYA: Sime Darby Plantation experienced a 64% decline in pretax profit to RM125 million for the first quarter of its 2019 financial year.

The sharp fall in profitability was attributable to lower average crude palm oil (CPO) and palm kernel prices.

CPO prices declined 18% year on year from RM2,452 to RM2,012 per metric tonne.

“The challenging business environment for the palm oil industry with prevailing low CPO and palm kernel prices as well as a volatile external environment influenced by the US-China trade war has continued to impact the industry’s performance,” Mohd Bakke Salleh, the company’s managing director, told reporters after the presenting the results.

He also said that external factors including the negative perception of the palm oil industry due to deforestation played a role in the decline of CPO prices.

The company is underaking an asset monetisation exercise for several parcels of land identified with potential for property development and government infrastructure programmes.

It hopes to raise RM1 billion in gross proceeds from the monetisation excercise by the end of the year.

Bakke also said the company was seeking to exit the palm oil business in Liberia.

He said Sime Darby Plantation was looking at a 50:50 mix for its upstream and downstream business.