KUALA LUMPUR: Oleochemical and palm oil company Southern Acids (M) Bhd
expects crude palm oil (CPO) prices to remain volatile in 2025.
The company attributes this to several factors, including slower-than-expected production growth in Indonesia and the anticipation of higher global soybean production.
Stronger short-term demand for palm oil from major importing countries, such as India and China, is expected to provide support.
Additionally, the implementation of Indonesia’s B40 biodiesel mandate beginning in 2025 is likely to influence market dynamics.
“We maintain a cautious outlook on milling and cultivation. CPO price volatility continues as a key concern, which could impact both the industry and our business segment,” it said in the notes accompanying its financial results.
Southern Acids said the global oleochemical market was highly competitive and fragmented.
“Given our relatively smaller operational scale, the group is especially vulnerable to production costs, shifts in sales volume, and fluctuations in commodity prices. Furthermore, the outlook for our oleochemical manufacturing business may be affected by geopolitics and risk of slowdown in global economic growth,” it said, adding that it continued to prioritise cost optimisation and enhancing operational efficiency.
In the third quarter ended Dec 31, 2024 (3Q24), Southern Acids’ net profit surged over five-fold to RM24.9mil, or earnings per share of 18.23 sen compared with RM4.6mil, 3.33 sen in the year-ago quarter.
Southern Acids said the improved profit was primarily due to higher pretax profit contributions from oleochemical manufacturing as well as milling and cultivation.
Its revenue jumped 30.3% to RM303.1mil against RM232.6mil last year mainly driven by higher revenue contribution across its three core business segments.
For the nine months ended Dec 31, Southern Acids posted a 282.3% higher net profit of RM31.8mil on higher revenue of RM842.2mil.
“While we are hopeful for better prospects in the coming year, we remain vigilant of potential global challenges that could impact our operations. Our commitment to strengthening operational efficiency and maintaining a resilient balance sheet will ensure we navigate uncertainties effectively and sustain stable growth,” Southern Acids said.
