The company expects recovery in Malaysia’s production and nothing less than what it has achieved in 2019, says MD

by NUR HAZIQAH A MALEK / pic by MUHD AMIN NAHARUL

SIME Darby Plantation Bhd (SD Plantation) foresees its crude palm oil (CPO) production in Malaysia and Indonesia recovering from the decline last year, while adopting an optimistic attitude towards high prices for the year.

The group said among the group’s priorities for the year includes leaving no stone unturned against the issuance of Withhold Release by the US Customs and Border Protection and allegations of forced labour by non-profit group Liberty Shared to allay stakeholders concerns on the prospect of the group.

MD Mohamad Helmy Othman Basha (picture) said the company expects recovery in Malaysia’s production and nothing less than what the group has achieved in 2019.

“We are optimistic this would be a better year for us and also better prices to look forward to. We have been putting effort in the past two years to secure a future for the company,” he said during the group’s result announcement yesterday.

In a separate statement, the company’s chairman Tan Sri Megat Najmuddin Megat Khas said the higher palm oil prices were a blessing for all industry players in what had been a challenging year for the global economy.

The higher average CPO prices ealised were higher in the fourth quarter (4Q) as well, due to rally in prices although it was dampened by forward sales in Malaysia.

During the 4Q, the upstream average CPO realised were RM2,523 per metric tonne (MT) in Malaysia, RM2,809 per MT in Indonesia and RM2,753 per MT in Papua New Guinea (PNG) and Solomon Islands (SI).

The group’s edible oil production in the top two producing countries fell due to extreme weather conditions that were caused by floods and the labour shortage as a result from the coronavirus pandemic.

Its fresh fruit bunches (FFBs) production was higher in Indonesia, PNG and SI, marking a surge in the former during the quarter due to higher seasonal cropping, thus narrowing the year-on-year decline in production volume.

The production in PNG and SI for the 4Q was only 21% of the full year, and was impacted by the unfavourable weather conditions from heavy rainfall.

According to the group’s data, its production of FFB in 4Q ended Dec 31, 2020, was impacted by the floods in some parts of Johor, Pahang and Sarawak, which hindered harvesting activities, and the shortage of workers were recorded at 3,100 workers as of Dec 31, 2020.

SD Plantation made a net profit of RM149 million for the quarter, against the net loss of RM58 million recorded in the previous year, while revenue was also higher for the period at RM3.64 billion versus RM3.37 billion last year.

For the full year, SD Plantation recorded a net profit of RM1.19 billion against the net loss of RM200 million last year, and a stronger revenue of RM13.08 billion versus RM12.06 billion in financial year 2019 (FY19).

It has declared a final dividend of 5.42 sen per share, which together with the interim dividend of 2.57 sen per share, amounts to a single-tier dividend of 7.99 sen per share for FY20.

The group declared a special interim dividend of 1.45 sen per share which was paid on Nov 22, 2020, which took total dividends declared in 2020 to 9.44 sen per share for the year.

Read our previous report here

Sime Darby Plantation finds no systemic issues in operations