KUALA LUMPUR: SD Guthrie Bhd
remains optimistic about delivering a strong performance for 2026 on the back of robust plantation contributions and resilient crude palm oil (CPO) prices, although weather- related risks could weigh on production in the year ahead.
President and group chief executive officer Mohd Haris Mohd Arshad affirmed that the integrated palm oil and sustainable agribusiness group was on the “right trajectory” and momentum.
However, the El Nino conditions continue to be a supply-side risk, with potential lagged impact on plantation yields and palm oil supply, he said at the group’s third quarter for the financial year 2026 (3Q26) results briefing yesterday.
Meanwhile, SD Guthrie chief executive officer of upstream Indonesia Adrianudin Raj Azman said persistent dry conditions could mean a potential 10% reduction in Indonesian production in 2027, and a possibly higher fall in 2028 based on historical trends.
Nevertheless, rainfall in November and December would help mitigate the severity of the impact, he said.
Mohd Haris added that the weather is anticipated to normalise going into 2027, with forest fires expected to dissipate.
“However, I think the damage has been done with regards to Indonesia,” he said, reiterating his concern about the effect on its Indonesian production.
“What happens today will have an impact 12 to 16 months down the road, and what has happened over the last three or four months in Indonesia is not very good.”
Consequently, the group said it would remain focused on improving productivity and climate resilience in its upstream business.
On the CPO price outlook, Mohd Haris said he sees prices potentially reaching RM5,000 per tonne, noting that current weakness is the result of production increases, which typically occur in the third and fourth quarters.
“What we are seeing now is the effect of very good production uptake, particularly in Malaysia, resulting in a build-up in the inventory,” he noted.
“This then immediately led to a depression in prices, and hence the whole market came down,” he said, adding that the outlook going into 2027 remains intact.
In 3Q26, SD Guthrie’s net profit fell by around 17% year-on-year (y-o-y) to RM773mil from RM935mil, while revenue dropped to RM5.39bil from RM5.41bil the year before.
The group attributed the softer quarterly earnings to lower contributions from its industrial development, midstream and downstream segments.
This was partly offset by higher contributions from its upstream segment, which saw recurring profit before interest and tax (PBIT) grow 48% y-o-y in 3Q26.
Fresh fruit bunch production rose 8% y-o-y, while the average realised CPO and palm kernel prices increased y-o-y by 3% and 7%, respectively, to RM4,340 and RM3,342 per metric tonne.
On a cumulative basis, the group recorded a net profit of RM2.32bil for the first nine months of the financial year 2026 (9M26), up about 16% from RM2.01bil last year.
Year-to-date (y-t-d) revenue for 9M26 stood at RM15.03bil, down from RM15.4bil in the previous year.
Mohd Haris attributed the stronger nine-month performance to improved operational efficiency reflected in higher yield and oil extraction rate, a relatively well- performing midstream segment, and contributions from land monetisation and industrial development.
He added that the group’s production base has improved y-t-d, providing a further boost to the performance.
Moving forward, SD Guthrie intends to
home in on its midstream segment, focusing on improving oil aggregation, supply chain integration and feedstock security.
This segment will serve as a strategic bridge between its upstream and downstream operations, it said.
SD Guthrie split its midstream and downstream businesses into separate reporting segments from FY26 to bring greater transparency into group earnings drivers and integrated value chain.
While plantations remain at the core of the group’s wider strategy, it is also building up “complementary growth engines” to drive stronger earnings resilience and sustainable long-term value creation, SD Guthrie said.
The industrial development segment is increasingly becoming a long-term earnings pillar, having shown growth in 9M26 with a 78% PBIT increase compared to 9M25.
“The land that we have put aside for development in the pipeline is around 22,000 acres, and we are looking at about 1,500 acres for disposal,” Mohd Haris said.
In terms of land disposal, he noted that the group’s approach centres on monetising its land through joint ventures while retaining a stake, enabling it to continue generating recurring income.
Mohd Haris also believes that the group can “comfortably hit” the upper band of its RM500mil to RM700mil target of recurring income in the coming years.
Meanwhile, SD Guthrie’s renewable energy segment is expected to increasingly contribute to earnings diversification and enhance the group’s long-term value.
“We still have our aspiration to achieve a one gigawatt solar capacity, but I wouldn’t call it an aspiration anymore as it’s close to becoming a reality,” Mohd Haris said.
He noted that a particularly compelling value proposition can be found in combining its renewable energy and industrial development segment offerings.
For instance, companies could build factories in the area and also have the option of getting grid electricity supply for their operations, he said.
“Becoming an independent power producer in and of itself is not something that’s interesting to us,” he stressed.
“We’ve got to package it together with our industrial development, and that’s where the whole is greater than the sum of parts.”
