KUALA LUMPUR: Sime Darby Plantation Bhd posted a strong set of financial results in the first quarter ended March 31,2021 due to favourable crude palm oil (CPO) prices increased production and improved downstream performance.
It announced on Thursday its net profit rose by 20% to RM562mil from RM468mil a year ago. Its revenue increased by 21% to RM2.67bil from RM3.04bil. Earnings per share were 8.2 sen compared with 6.8 sen.
In declaring a dividend of 2.13 sen a share, it said CPO price in 1Q was driven primarily by record high prices of substitute oils and is expected to soften in the second half of 2021 as production increases.
“On the operational front, the group anticipates improved production this year whilst sustaining its efforts to increase efficiency and productivity through digitalisation, automation and mechanisation.
“Barring any unforeseen circumstances, Sime Darby Plantation expects its performance for the financial year ending Dec 31, 2021 to be promising, ” it said.
In the just ended 1Q, Sime Plantation said the group’s upstream performance improved to a profit before interest and tax (PBIT) of RM543mil (1QFY2020: RM288mil).
The company attributed this stronger PBIT to sustained higher CPO and palm kernel (PK) prices as well as increased fresh fruit bunch (FFB) production.
The downstream operations, Sime Darby Oils, recorded a 20% increase in PBIT at RM107mil, mainly due to improved performance in the Asia Pacific region.
The higher realised prices and increase in FFB production compensated for the lower oil extraction rate (OER), which was primarily the result of the acute labour shortage in Malaysia and adverse weather conditions in Indonesia.
“The group’s recurring PBIT improved by 75% year-on-year. However, its non-recurring PBIT declined by RM138mil due to reduced disposals of non-core assets, ” it said.
Sime Plantation chairman, Tan Sri Megat Najmuddin Megat Khas said, “Whilst the sustained high CPO price has certainly been a boon for the industry, I am also encouraged by our operational performance despite the challenges presented by the Covid-19 pandemic.
“With this strong showing in the first quarter, we are on-track to achieve our financial targets for the rest of FY2021.”
Its group managing director, Mohamad Helmy Othman Basha said: “We saw an improvement in the results of Sime Darby Oils in the Asia Pacific, which benefited from the market price uptrend. However, demand has yet to fully recover from the impact of Covid-19.
“The group is working with several parties to address the withhold release order that was imposed by the US Customs and Border Protection at the end of 2020.
“The group had appointed a third-party assessor to undertake a comprehensive review of all its Malaysian operations. This exercise is expected to be completed in June.
“We are committed to protecting the rights and safety of our workforce regardless of race, nationality or gender. As such, we are focused on ensuring safe working and living conditions for all our employees.”