KUALA LUMPUR: United Plantations Bhd
is mindful of the challenges which the second half of 2023 will bring, especially amidst the uncertainties of high inflation and recession fears coupled with the ongoing Russia-Ukraine war and its continued impact on global supply chains.
“Whilst costs of energy, fertilisers, chemicals, building materials and spare parts have come down from earlier highs, they are still above levels experienced a few years ago, resulting in our cost base increasing to its highest levels ever,” the plantation group said in the notes accompanying its financial results.
United Plantations said striving for cost efficiencies without compromising quality is crucial in its daily operations.
The group said with labour shortages improving due to border reopenings and an inflow of guest workers, the focus now lies on up-skilling these workers to enhance productivity and yields.
“This will be pursued relentlessly through continued mechanisation efforts and replanting of the older and less productive oil palm stands in order to take full advantage of our latest superior planting materials produced at our research department as a vital part of sustaining our positive development,” United Plantations said.
“Based on the current palm oil prices and the company’s focus on securing the budgeted crop in the second half of 2023, the board of directors expects that the results for the year will be satisfactory,” it said.
United Plantations noted that during the second quarter of 2023 prices have traded in a wide range between RM3,194 per tonne to RM3,995 per tonne for the third month position.
The price decline experienced in April and May came mainly as a function of anticipated palm oil production increases in Malaysia and Indonesia as well as the major central banks continuing to increase interest rates in an attempt to curb inflation which in turn has dampened the global economy putting pressure on equity and commodity prices.
As a result, palm oil prices briefly dropped below RM3,200 per tonne for the third-month position.
Nevertheless, it said in June there was a sharp recovery in prices due to significantly lower-than-expected production in Malaysia and Indonesia and with that lower stocks.
In the second quarter ended June 30, United Plantations saw its net profit fall 14% to RM159mil, or earnings per share of 38.34 sen against RM184.6mil, or 44.51 sen in the same quarter last year.
Revenue for the quarter tumbled 33% to RM470.1mil from RM701.2mil a year prior.
For the first six months, it posted a net profit of RM271.1mil, up 11% from RM244.3mil while revenue fell to RM930.1mil against RM1.34bil.
