KUALA LUMPUR: Following a decline in profitability in the recent quarter, Boustead Plantations Bhd said the prices of palm oil are expected to remain highly volatile for the rest of the year due to high stock levels in Malaysia and Indonesia.
Compounding the challenges, the plantations group added that high production cost resulting from higher minimum wages coupled with higher fertiliser and diesel prices will continue to be a burden over the remainder of the year.
"The group's profitability is dependent on the crude palm oil (CPO) price direction and crop production," it said in a filing with Bursa Malaysia.
"Nonetheless the group is confident that its ongoing efficient cost management and crop improvement initiatives will deliver a positive outcome in 2022," it added.
According to the group, the Peninsular Malaysia and Sabah regions have shown some improvements in fresh fruit bunch (FFB) yield this year as a result of continuous improvement through the implementation of Plantation Performance Improvement Programs.
It added that the Ukraine-Russia conflict and climate changes in Europe, China, India and the US could divert demand to palm oil due to price spikes in other crops, which could potentially create global crop shortages.
In the third quarter ended Sept 30, 2022, the group posted a net loss of RM352,000 as compared to a net profit of RM95.56mil in 3QFY21.
It said profit from operations came to RM1.4mil as compared with RM133.1mil in the comparative quarter last year, owing to lower FFB production and palm product prices as well as higher manuring cost.
Lower palm product prices had also adversely affected the valuation of FFB, CPO and palm kernel, it said.
Revenue in the quarter came to RM240.25mil, which compares to revenue of RM293.77mil in the same quarter last year.
Over the nine months period to Sept 30, 2022, Boustead Plantations net profit came to RM508.02mil on revenue of RM913.37mil as compared with net profit of RM156.16mil and revenue of RM708.49mil in the same 2021 period.