KUALA LUMPUR: United Plantations Bhd warned that its financial performance in 2019 will be lower than 2018 due to weaker palm oil prices.
The company, in a filing with Bursa Malaysia today, said net profit in the first quarter ended March 31 fell by about a third to RM66.9mil from RM100mil a year ago,
Revenue was little changed at RM322mil.
"On average, the crude palm oil (CPO) and palm kernel prices for the group were lower by 14.1% and 47.0% respectively in the current quarter as compared to the corresponding quarter," it said.
The price of CPO averaged at around RM2,020 a tonne in the first quarter, United Plantations said.
The lower price was due to the larger than expected Malaysian palm oil production, combined with slow export growth.
"The burdensome stocks are likely to keep palm oil prices under pressure in the near to medium term in order to garner additional demand from the domestic and the export market," it said.
With palm oil prices at multi year lows, United Plantations said the result for 2019 will be lower than 2018.
"Nevertheless, with the prices contracted under our forward sales policy and with our Indonesian production improving, coupled with large areas steadily coming into maturity from our replanted areas in Malaysia, the company expects that the results will still be satisfactory," it said.