PETALING JAYA: Sime Darby Plantation Bhd (SDP) is anticipating an improved performance in the second half of fiscal year 2023, driven by increased crop production following the normal peak crop trend.
Group managing director Datuk Mohamad Helmy Othman Basha mentioned that their fresh fruit bunches (FFB) production is expected to steadily increase as the group moves into the peak production period in the upcoming months.
“I can only give a range, we are going to see an increase of a single digit increase between five to 8% overall. But for Malaysia, I believe the increase over last year will be a double digit increase in the production of crops,” he told a virtual media conference during Sime Darby Plantation’s Second Quarter Financial Year 2023 results announcement.
Additionally, he expressed optimism about further FFB production improvement as they enhance field conditions in their Malaysian operations.
“These efforts complement the group’s commitment to continue transformational initiatives to mechanise, automate and digitalise its operations in Malaysia,” he said.
He stated that the ongoing aggressive rehabilitation of their upstream Malaysia operations is starting to yield positive results, with improvements observed in Malaysian FFB production in the second quarter of 2023.
“This, coupled with the arrival and upskilling of new harvesters will put our harvesting operations and field conditions back on track to deliver better productivity for the rest of the year,” he said.
Regarding prices, the company mentioned that the rebound in CPO and other commodity prices is primarily attributed to the growing uncertainty in key oilseed regions’ weather conditions and the escalating Russia-Ukraine conflict.
Hence, there’s an expectation of ongoing price volatility in the near term, particularly as geopolitical crises and global macroeconomic conditions further contribute to existing uncertainties.
“The CPO price is now trading in the upper kind of reading range and could even cross 4,000 levels. We believe that the market will probably be around these levels until the end of the year,” said Sime Darby Oils managing director Mohd Haris Mohd Arshad.
For the second quarter of 2023 (Q2’23) ended June 30, 2023, SDP net profit fell by 53% to RM380 million, from RM812 million a year ago. Meanwhile, revenue decreased 23% to RM4.31 billion from RM5.59 billion in the same period last year.
For the six months period, the group registered a net profit of RM449 million as compared to RM1.53 billion in the same period last year and revenue of RM8.37 billion as compared to RM9.97 billion.
The group said that the decline in profits was primarily due to lower average realised CPO and palm kernel prices, which have declined from the peak levels in the previous year.
In addition, there was higher operating expenditure, mainly from higher fertiliser prices and labour costs, particularly in Malaysia, where the group is rehabilitating its operations.
