Sime Darby Plantation's Q1 earnings leap over 6 times to RM1.02 billion

PETALING JAYA: Sime Darby Plantation Bhd's net profit jumped over six times to RM1.02 billion for the first quarter ended September 30, 2017 against RM151 million in the previous corresponding period, mainly driven by a disposal gain of RM676 million and higher crude palm oil (CPO) prices.
Its revenue rose 25.6% from RM2.82 billion to RM3.54 billion.
Sime Darby Plantation told Bursa Malaysia that the RM676 million gain was due to the sale of its land to Sime Darby Property Bhd. The jump in earnings was also supported by the recovery of fresh fruit bunches (FFB) production from the effects of El Nino and higher average CPO price realised.

For the quarter under review, its FFB production increased 25% to 2.696 million metric tonnes and the average CPO price realised was 4% higher at RM2,693 per metric tonne as compared with the previous corresponding quarter.
Barring any extreme weather abnormalities, Sime Darby Plantation expects FFB production in the financial year ending June 30, 2018 to continue to recover from the lingering effects of the El Nino in 2015.
"The group will continue to focus its efforts on accelerating the replanting exercise to improve yields and reduce costs for a long term sustainable performance. The group expects a continued year-on-year recovery due to the coming of maturity of additional planted areas and the progression of existing mature areas into higher yielding age brackets."
Meanwhile, it noted that CPO prices will continue to be dependent on economic and market volatility, influenced by overall supply and demand balance of the global edible oil markets, weather conditions, foreign currency rates, and the development in the implementation of biodiesel mandates and EU resolutions.
"We expect CPO prices to be sustained at above RM2,500 per metric tonne up to March 2018."