By TMR/Pic by MUHD AMIN NAHARUL
SIME Darby Plantation Bhd’s net profit rose 28% year-on-year (YoY) to RM718 million for the first quarter ended March 31, 2022 (1Q22), driven by stronger pricing power for its edible oils.
The planter added its higher recurring profit in the period compensated for the lower profits from non-recurring transactions, a result of lower gains from compulsory land acquisition by the government in Malaysia.
Revenue for the quarter rose 19% YoY to RM4.38 billion while earnings per share was 10.40 sen, its exchange filing today revealed.
In a statement today, Sime Darby Plantation stated it continued to register stronger YoY performance in 1Q22 as crude palm oil (CPO) and palm kernel (PK) prices remained buoyant.
Realised CPO prices in 1Q22 averaged RM4,465 a tonne, up 40% YoY compared to RM3,185 per metric tonne (MT) in 1Q21, whilst average realised PK prices in the same period increased by 84% YoY to RM4,105 per MT.
The higher average realised prices compensated for lower fresh fruit bunch (FFB) production as the group continues to be impacted by the prolonged labour shortage in the Malaysian palm oil industry.
Sime Darby Plantation also experienced a decline in its Indonesian FFB production as production was seen normalising from 1Q21’s record high production.
Sime Darby Oils registered a 23% YoY increase in pre-tax profit of RM132 million in 1Q22 on higher margins recorded by its Asia-Pacific (APAC) bulk operations which partially mitigated lower sales volumes and margins in its APAC-differentiated and European operations.
Group MD Mohamad Helmy Othman Basha (picture) said Sime Darby Plantation has submitted a comprehensive report to the US Customs and Border Protection (USCBP) to address the requirements of the US’ import regulations and international labour standards.
“The company has engaged with the USCBP on the submission and will continue to give our full cooperation as we work towards modifying (uplifting) the finding. Our commitment to continuous improvement extends beyond our own operations to include our entire supply chain, which we hope will help the industry to move forward proactively,” he said in the statement.
USCBP issued a Withhold Release Order on the group on Dec 30, 2020, based on information that reasonably indicates the presence of all 11 of the International Labour Organisation’s forced labour indicators in Sime Darby Plantation’s production process.
For the remainder of 2022, Sime Darby Plantation foresee palm oil demand may be impacted by current elevated prices, but will be mitigated by the tight supply and availability of alternative vegetable oils as well as supply chain disruptions caused by the ongoing Russia-Ukraine conflict.
The group anticipates lower overall FFB production against financial year 2021, as the intake of new foreign workers for the plantation industry is only expected to arrive in the second half of the year.
“Barring any unforeseen circumstances, the group expects encouraging performance for the financial year ending Dec 31, 2022,” said Mohamad Helmy.