KUALA LUMPUR: Sime Darby Plantation Bhd
group managing director Mohamad Helmy Othman Basha said the group anticipated improved fresh fruit bunch (FFB) production this year with the easing of the labour shortage in Malaysia.
Additionally, with the group’s intensive mechanisation, automation and digitalisation efforts, he is optimistic of achieving improved productivity this year.
According to Mohamad Helmy, the group was giving the highest priority to "factors under its control", namely the rehabilitation of Upstream Malaysia and the initiative to reduce dependence on manual and foreign workers.
"These efforts will be the foundation of more sustainable, productive, and efficient operations for us in the future, as we continue to recover our productivity and reinvent our plantation operations this financial year," he said in a statement.
Sime Darby Plantation announced a net profit of RM69mil in the first quarter of its financial year ended March 31, 2023, which was a sharp decline from a net profit of RM718mil in the same quarter last year.
The group's bottomline represented an earnings per share of one sen as compared with 10.4 sen in the comparative quarter.
Revenue, meanwhile, dropped to RM4.07bil from RM4.38bil in 1QFY22.
According to the group, the decline in profits was mainly owing to lower year-on-year (y-o-y) average realised CPO and palm kernel (PK) prices, and lower fresh fruit bunches (FFB) production.
It said profitability was also affected by higher finance costs with increased benchmark interest rates.
Over the first quarter of 2023, realised CPO prices averaged RM3,887 per metric tonne (MT), a y-o-y decline of 13% compared to RM4,465 per MT the year before.
Average realised PK prices declined significantly by 56% y-o-y to RM1,794 per MT from RM4,105 per MT in the previous period.
The group’s overall FFB production declined 5% y-o-y as its Malaysian upstream operations continued to be impacted by the lingering effects from the prolonged acute labour shortage, resulting in a 11% decline.
In downstream operations, Sime Darby Oil registered profit before interest and tax of RM68mil as compared to RM161mil in the previous year due to lower sales volumes and margins in its Asia Pacific bulk and differentiated operations.
Its European operations however recorded improved performance in both sales volumes and margins.
In its projections, Sime Darby Plantation expects CPO prices to trade at current levels in the near term, depending on the supply outlook of competing oils as well as Indonesia's palm oil export policies.
There are also other concerns such as slowing growth and high interest rates limiting the upside potential of commodity prices.
In addition, the lower demand and higher stockpiles in major exporting countries could pose as further challenges to CPO prices this year.
