Sime Darby Plantation Q2 profit rises by 34% from year ago

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Reuters pic

KUALA LUMPUR: Sime Darby Plantation, the world’s largest oil palm planter by land holdings, today said its second-quarter net profit rose by 34% versus a year ago, on the back of improvements in fresh fruit bunch production (FFB).

Sime Darby Plantation announced net profit of RM429 million for the quarter ending in December on a revenue of RM4.09 billion.

This compares with net profit of RM319 million and revenue of RM3.9 billion in the corresponding quarter a year ago. Conglomerate Sime Darby Berhad spun off its plantation division in a separate listing in November.

“The group’s FFB production improved by 2% from 2.72 million tonnes in 2Q 2017 to 2.76 million tonnes in 2Q 2018 as it recovered from the impact of El Nino,” the company said in a statement filed to the Bursa Malaysia at the midday break.

“Barring any extreme weather abnormalities, the group expects the full-year FFB production to improve from the previous financial year as the El Nino effect tapers off in line with increased FFB output in the oil palm industry.”

The company added that the government’s introduction of an export tax suspension on crude palm oil, along with demand during upcoming holiday periods, will support demand for the tropical oil.

Malaysia announced a three-month suspension on crude palm oil export taxes at the start of 2018 to boost demand and reduce local inventory levels.

Other factors such as crude oil prices, biodiesel mandate implementations, the ringgit’s performance and competition from other edible oils are also likely to impact crude palm oil’s market price, said Sime Darby Plantation.

Sime Darby Plantation’s shares were trading 0.2% higher before the break, outperforming the benchmark index which was down 0.1%.

Shares of the plantation company debuted on Nov 30 at RM5.60, and have dropped 1.1% since then.