Sime Darby Plantation’s 3Q20 profits up

Unemployed Malaysians are urge to seize the job opportunities available in the palm oil industry today

by AFIQ AZIZ / pic by MUHD AMIN NAHARUL

SIME Darby Plantation Bhd’s (SDP) third quarter 2020 (3Q20) earnings got a boost from higher crude palm oil (CPO) and palm kernel prices despite the operational issue with labour shortages.

Net profit for the period ended Sept 30, 2020, rose to RM190 million versus a net loss of RM243 million in 3Q19 as revenue surged to RM3.18 billion in the quarter from RM2.82 billion last year.

SDP group MD Mohamad Helmy Othman Basha (picture) said CPO price improved in the second half (2H) of this year, as well as demand with expectations of further improvement next year.

As a sector that provides essential products to the world, he said the industry is showing resilience amid global uncertainties.

“Given these challenging times, we urge more unemployed Malaysians to seize the job opportunities available in the palm oil industry today.

“As a measure to further mitigate the industry’s current labour shortage, we also hope the government will continue with its efforts to alleviate restrictions on foreign labour, while the group continues to ramp up mechanisation and digitalisation efforts to increase productivity and reduce reliance on labour in the medium-to-long term,” he said in a separate statement.

The benchmark CPO futures contract closed the week at RM3,288 a tonne, an eight-and-a-half year high.

Yesterday, Moody’s Investors Service Inc raised its medium-term price sensitivity range for CPO to between RM2,200 and RM2,600 per tonne over the next 12 months, with a midpoint of RM2,400 due to continued supply constraints.

The forecast is 14% higher than the RM2,100 midpoint of its previous price range of RM1,900 to RM2,300.

However, due to the impact of Covid-19 and Movement Control Order since March, the planter has been facing a labour crunch at its estates.

Last August, SDP said the constraints on access to labour, volatility of CPO prices and a potential second wave of Covid-19 infections will impact its earnings for the financial year ending Dec 31, 2020.

The group expects fresh fruit bunches production to be flat barring any extreme weather abnormalities that could further drag its performance.

In September, the group said it will source out its manpower from prisons and drug rehabilitation centres, as part of its efforts to hire more locals to overcome its foreign labour shortage woes.

Additionally, SDP chairman Tan Sri Megat Najmuddin Megat Khas said for the rest of the financial year, the group will remain focused on delivering value to stakeholders as it navigates through the current challenging environment.

“We will continue to prioritise the health and safety of our stakeholders, the job security of our employees, our commitment to sustainable practices, protection of human rights, research and development, and innovation initiatives,” he said in the statement yesterday.

SDP is optimistic it’s financial performance for the financial year ending Dec 31, 2020, will be better than last year.

SDP shares closed unchanged at RM5.17 yesterday, giving it a market capitalisation of RM35.59 billion.