United Plantations’ profit soars 58% in 3Q

The firm has positive liquidity and capital resources without the need for asset impairments arising from Covid-19 outbreak

by S BIRRUNTHA / pic by BLOOMBERG

UNITED Plantations Bhd’s net profit jumped 58% year-on-year (YoY) to RM95.33 million in the third quarter ended Sept 30, 2020 (3Q20), underpinned by the higher revenue from its plantation and refinery segment.

Revenue for the period rose 20% YoY to RM334.04 million but earnings per share for the quarter was 22.98 sen.

In a filing to Bursa Malaysia yesterday, the plantation group said it has positive liquidity and conservative capital resources to perform satisfactorily without the need for any asset impairments arising from the Covid-19 pandemic.

It added that the group will remain vigilant and continue to enforce various standard operating procedures (SOPs) introduced by the government to avoid a Covid-19 outbreak.

“With the escalation of Covid-19 around the world and in the country, it is of utmost importance to keep our guard up in order to minimise the risk of Covid-19 entering United Plantation’s premises which would result in a temporary shutdown of its factories or plantation operations.

“The board views this as being the single largest risk in the foreseeable future and due attention is therefore being directed towards doing everything that is practically possible to mitigate this risk,” the group said in a statement yesterday.

For the cumulative nine months, United Plantations’ net profit increased 48% YoY to RM300.1 million as revenue increased by 9% YoY to RM947.26 million contributed by the increase in revenue for its plantation segment.

The group said the plantation segment’s revenue increased by 20.2% YoY to RM616 million in the nine months mainly due to higher group crude palm oil (CPO) and palm kernel (PK) production, and higher group CPO and PK average prices.

The refinery segment’s revenue increased marginally by 1.2% YoY to RM590.3 million in the nine months due to higher prices despite sales volume falling by 7.3%.

United Plantations noted that commodity markets are expected to experience high volatility over the next six months mainly influenced by the development of the Covid-19 pandemic and its impact on the world economy and the outcome of the US presidential election.

“Based on the prices contracted under the company’s forward sales policy and with production having increased due to large areas steadily coming into maturity from our replanted areas in Malaysia, the board expects results for the year will be satisfactory and significantly better than in 2019,” it noted.

United Plantations announced a special single-tier dividend of five sen per share and an interim single-tier dividend of 15 sen per share, payable on Dec 4, 2020.

At close yesterday, United Plantations’ shares closed 1.27% or 18 sen higher to RM14.40, valuing the company at RM5.99 billion.