PETALING JAYA: Johor Plantations Group Bhd (JPG) believes crude palm oil (CPO) prices in the coming months will continue to be influenced by the production and export levels in Malaysia and Indonesia, biodiesel mandates, and regional weather and labour conditions.
Over the longer term, the plantation firm expects demand for vegetable oils to grow, but acknowledged any escalation in geopolitical tensions could disrupt the global supply chain, thus dampening the demand for vegetable oils.
Releasing its second-quarter (2Q24) results yesterday, the group saw its net profit almost quadrupling year-on-year (y-o-y) to RM49.7mil, as revenue also climbed 34.9% to RM360.9mil.
At the same time, earnings for the first half-year up to June 30 (1H24) also surged close to three times y-o-y to RM99.7mil, as turnover also rose 26.2% to RM655.8mil.
JPG attributed the good 2Q24 and 1H24 showing to increases in revenue from selling CPO and palm kernel (PK).
In the group’s filing with Bursa Malaysia yesterday, it was revealed that CPO prices on average per tonne were 3% higher in 1H24 y-o-y, while average PK prices were even more elevated relatively at 16.4% compared to the same period last year.
On a quarterly basis, net profit was almost flattish, dipping fractionally from RM50mil for the three months ended March 31, despite revenue rising 22.4% from RM294.9mil.
Meanwhile, JPG declared a dividend of 1.25 sen per share for 2Q24, after having not declared any during the first quarter.
Looking back to 1H23, the group had then declared cumulative dividends amounting to 5.25 sen per share, with 1.25 sen also announced during 2Q23.
From a broader perspective, it said the US Federal Reserve’s interest rate decisions are closely monitored by the market, while projecting a dovish path ahead may have a positive impact on the economy.
“We remain committed to producing high-quality sustainable products. It will also continue to drive operational efficiency, particularly in improving yield, oil extraction rate and plant efficiency, while accelerating its mechanisation and digitalisation efforts,” said the group.
More importantly, it commented that fresh fruit bunch (FFB) production is largely influenced by Malaysia’s rainfall patterns, which peak in the second half of the year, which will drive increased CPO and PK sales volumes.
On the flip side, it noted that weather fluctuations, particularly periods of extreme drought brought on by weather phenomena such as El Nino, can hinder FFB production by causing moisture stress in oil palms as early as five to six months prior.
“This stress impacts physiological activity, thereby reducing FFB yields and consequently CPO production.
“Conversely, favourable weather conditions support higher production levels,” said JPG.
Additionally, it reiterated that its profitability is thus determined by the prices and volumes of its products, both of which are influenced by distinct and cyclical weather seasons, observing that under the current climate conditions, the group faces greater fluctuations in production.
“Therefore, we are keen to develop strategies to minimise the effects of unfavourable climate and maximise the benefits of a favourable climate to stabilise and enhance production,” it said.
Barring any unforeseen circumstances, the group is expecting its performance for the financial year 2024 to be satisfactory.
