Boustead Plantations Q1 earnings slide on lower CPO prices

Malaysian palm oil futures declined on Tuesday evening as high end-stocks and sluggish demand dented sentiment but pared an earlier 1 percent drop

KUALA LUMPUR: Boustead Plantations Bhd said it is focused on strengthening its operational efficiencies coupled with a strategic expansion of its plantation and landbank following a decline in profits in the first quarter of 2018.

The group saw an eroded net profit of RM5.25mil for its first quarter ended March 31, 2018, compared with RM29.56mil in the year-ago quarter as crude palm oil prices were significantly lower from a year earlier.

Revenue for the quarter under review was 18% lower on year at RM154.6mil.

In a press statement, the group said the average crude palm oil selling price was RM2,491 per metric tonne (MT), 21% lower than the average price of RM3,166 per MT in the same quarter last year. The average price of palm kernal oil also dropped 32% to RM2,188 per MT.

"It was indeed a challenging first quarter as lower palm product prices impacted the Group. The year ahead is expected to see an increasing supply of alternative vegetable oils, putting pressure on demand for CPO and leading to increased palm oil inventories. 

"However, the CPO market could benefit from the likelihood of higher tariffs by China on US soybean as well as the European Union’s removal of anti-dumping duty on Indonesian biodiesel," said Tan Sri Lodin Wok Kamaruddin, vice-chairman of Boustead Plantations.

He said the group's acquisition of land in Sabah and the proposed disposal of 139ha of Malakoff Estate in Penang, expected to be completed by the third quarter of 2018, will contribute positively to earnings.

The group declared a first interim dividend of 2.5 sen per share with entitlement and payment dates on June 8 and 27 respectively.