Sime Darby Plantation's Q3 earnings slip 39% on lower FFB production, CPO price

PETALING JAYA: Sime Darby Plantation Bhd's net profit fell 39.3% to RM249 million for the third quarter (Q3) ended March 31, 2018 against RM410 million in the previous corresponding period, due to lower fresh fruit bunches (FFB) production as well as lower average crude palm oil (CPO) price and palm kernel price realised.
Its revenue for the quarter under review declined 15.8% to RM3.66 billion from RM4.35 billion.
The group said in a filing with the stock exchange that its FFB production declined 5% to 2.34 million metric tonnes (MT) in Q3 2018 from 2.46 million MT in Q3 2017, due to lower production from Indonesia, Papua New Guinea and Solomon Islands.
Average CPO price realised contracted 20% year-on-year to RM2,452 per MT amid weaker market sentiment.
Sime Darby Plantation expects its full-year FFB production to improve from the previous financial year as the El-Nino effect tapers off.
"Although this is expected to continue putting downward pressure on CPO prices, the upcoming festive season, and possible tariffs by China on soybean imports from the US could lend support to palm oil demand."
Sime Darby Plantation executive deputy chairman and managing director Tan Sri Mohd Bakke Salleh said the group remains steadfast to deliver satisfactory results on the back of continuous efforts to enhance productivity and cost efficiency.
"We are confident that the various efforts to improve operational performance such as accelerated replanting, mechanisation and water management at our estates, in addition to numerous other initiatives for cost reduction, will support the achievement of our targets."
For the first nine months of the year, Sime Darby Plantation's net profit almost doubled to RM1.7 billion to RM879 million on the back of a 1.7% rise in revenue to RM11.29 billion from RM11.09 billion.
At 12.30pm, its share price gained 1 sen or 0.2% to RM5.42 on some 875,100 shares done.