However, other factors such as biodiesel mandates in malaysia and Indonesia are expected to keep palm product prices resilient in the near term.
"We are cognisant that factors beyond our control, such as the recent outbreak of the Covid-19 in China, may have negative implications on global economic growth and demand for palm oil.
"The impact from restrictions placed by India on imports of refined palm oil will also be negative to the industry," said Sime Darby Plantation chairman Tan Sri Abdul Ghani Othman.
Announcing its financial results for 2019, Abdul Ghani said it was a challenging year as unfavourable weather conditions and low CPO and palm kernel prices over most of the year weighed on its performance.
Its continuing operations were negative impacted, resulting in a lower net profit of RM122mil as compared to RM729mil in the previous year.
Furthermore, its discontinuing operations, comprising its Liberian operations and joint ventures in the oeleochemical and biomass businesses, posted a net loss of RM322mil mainly owing to the impairment of assets in Liberia.
Accordingly, the group incurred a net loss of RM200mil as compared to a net profit of RM523mil in the previous year.
Moving forward, Sime Darby Plantation group managing director Mohamad Helmy othman Basha is confident that the group remains on track in its strategies of increasing profit contribution from its downstream segment, improving operational efficiencies in its Upstream operations and maintaining disciplined management of cost and liquidity.
“The Group continues to place priority in its deleveraging efforts and completed the refinancing of its credit facilities worth approximately RM3.9bil on marginally improved terms in December 2019," he said.
"With this plan set in motion, we are one step closer to realising our aspirations to reduce the Group’s gross gearing ratio from 49 percent as at 31 December 2019 to approximately 30 percent within the next three years,” he added.
Did you find this article insightful?