Production output in 1Q25 continued to be weak. — Bloomberg
PETALING JAYA: Planters’ financial results for the first quarter of financial year 2025 (1Q25) largely met expectations, although earnings came in flat quarter-on-quarter (q-o-q).
UOB Kay Hian (UOBKH) Research, in a report to clients, said this was despite lower output, given higher realised average selling prices (ASPs) alongside improved downstream segment performance.
“We expect 2Q25 earnings to be supported by a sharp pick-up in production volume, despite the decline in crude palm oil (CPO) prices and maintain ‘market weight’ on the sector with CPO prices likely to trade sideways in the near term,” the research house said.
It said planters’ 1Q25 earnings met both its, and market expectations, as companies broadly reported in-line results except for Genting Plantations Bhd
’s earnings.
“On aggregate, 1Q25 sector earnings were higher, driven mainly by higher selling prices of both CPO and palm kernel (PK). On a quarterly basis, sector earnings were flattish despite 1Q25’s seasonal decline in fresh fruit bunch (FFB) output, offset by higher realised ASPs (in particular for PK sales).”
As for integrated players’ downstream operations, segment performance generally improved q-o-q albeit on an uneven basis, it added.
Production output in 1Q25 continued to be weak, with FFB volume for companies under its coverage falling by 5% on average.
This was largely in line with industry trends as CPO production from Malaysia and Indonesia dropped by 6% and 2% on a yearly basis respectively during 1Q25.
Production has started to recover since March, with companies’ FFB output in April rising by 14% year-on-year (y-o-y) and 16% month-on-month on average.
While the rate of change is likely to normalise from May, 2Q25’s sector output appeared on track to post a sharp sequential increase compared with 1Q25.
