Executive chairman/managing director Tan Sri Mohd Bakke Salleh(filepic) said CPO prices hit the floor price of RM2,100 per tonne in July.
KUALA LUMPUR: Sime Darby Plantation Bhd
's net profit of RM115mil in the quarter ended Sept 30, 2018 was impacted by the lower average crude palm oil (CPO) and palm kernel (PK) prices.
It said on Friday though the weaker prices also impacted the profit before tax (PBT) which was RM212mil, it was partly mitigated by higher fresh fruit bunches (FFB) production and improved oil extraction rate (OER), as well as lower production and finance costs.
Sime Darby's revenue was RM3.04bil in the quarter while earnings per share were 1.7 sen. The group reported a recurring profit before interest and tax (PBIT) of RM259mil this quarter as compared with RM512mil a year ago.
Recurring PBIT declined by 49% year-on-year due to lower profit contributions from both the upstream and downstream segments arising from lower average CPO and PK prices realised, and reduced margins from the differentiated products business.
Sime Plantation said average CPO price realised fell by 21% on-year to RM2,117 per tonne from RM2,693. Average PK price realised declined by 22% on-year to RM1,649 per tonne from RM2,109 . per tonne.
The decline in earnings was partially mitigated by higher FFB production, which had increased by 2% to 2.75 million tonnes in the three-month period ended Sept 30, 2018. The OER in this quarter improved 21.06% from 20.93%.
Sime Plantation's executive deputy chairman and managing director Tan Sri Mohd Bakke Salleh said: “We are well into the half-way mark of the six-month financial period as SD Plantation moves towards Dec 31, 2018.
“The business environment remains challenging as the CPO price traded at a low of RM2,065 per tonne in September. Nevertheless, we remain steadfast in our drive to improve operational efficiency.”
In the quarter, Sime Plantation's finance cost fell by RM6mil to RM7.159bil from RM8.815bil a year ago.
Upstream Operations
In the three-month period ended Sept 30, Upstream Malaysia registered a recurring PBIT of RM125mil, down 59% on-year from RM304mil due to the lower average CPO and PK prices realised.
Upstream Papua New Guinea (PNG) and Solomon Islands (SI) reported a lower recurring PBIT of RM30mil compared with RM38mil a year ago due to the weaker average CPO price realised which fell by 15% on-year to RM2,289 per tonne from RM2,690
Upstream Liberia's losses narrowed to RM18mil from RM23mil on the back of a 86 percent YoY increase in FFB production and lower production costs which cushioned the impact of lower average CPO and PK prices realised.
Sime Plantation pointed out the mpact of lower average CPO and PK prices realised mitigated by improvements in operational efficiencies
Downstream operations
As for the downstream operations, it recurring profit fell to RM48mil from RM70mil a year ago.
The weaker performance was mainly due to lower contribution from the differentiated products business.
This was largely due to lower sales volume and margins in view of higher competition coupled with the lower seasonal demand.
The decline in earnings was partially mitigated by improved performance from the bulk products business due to better margins in Indonesia amid high inventory levels in the country.
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