PETALING JAYA: Sime Darby Plantation Bhd posted a net loss of RM45 million in the fourth quarter ended Dec 31, 2019 (Q4), largely due to lower fresh fruit bunch (FFB) production and lower contribution from Sime Darby Oils (downstream) operations.
There is no comparative for Q4 and the financial year ended Dec 31, 2019 (FY19) due to the change in the financial year end from June 30 to Dec 31.
However, for comparison, the net loss was against a net profit of RM172 million in the same quarter last year.
With the group’s discontinuing operations recording a net loss of RM13 million, the group’s net loss totalled RM58 million in Q4 against a net profit of RM129 million in the corresponding quarter of the previous year.
It posted a revenue of RM3.38 billion in Q4.
For FY19, Sime Darby Plantation posted a net profit of RM122 million from its continuing operations. For comparison, this was lower compared to its net profit of RM729 million in the corresponding period of the previous year, attributable to lower crude palm oil (CPO) and palm kernel (PK) prices realised, as well as lower FFB production in the year under review.
The group’s discontinuing operations, which comprise its Liberian operations and joint ventures in the oleochemical and biomass businesses, recorded a net loss of RM322 million mainly arising from the impairment of assets in Liberia. Accordingly, the group posted a net loss of RM200 million for the full year compared to a net profit of RM523 million in the previous year.
Its FY19 revenue stood at RM12.06 billion.
It declared a final single tier dividend of 1.0 sen per share in respect of FY19.
Chairman Tan Sri A Ghani Othman said FY19 proved to be challenging for its plantation industry and Sime Darby Plantation as it continued to face unfavourable weather conditions and the low CPO and PK prices for the most part of the year.
“However, we are progressing into the new year 2020 with renewed enthusiasm. CPO prices have rebounded towards the end of 2019 and this may offer some respite to the industry players if the price recovery is sustained,” he said in a statement.
It is cognisant that factors beyond its control, such as the recent outbreak of the Covid-19 in China, may have negative implications on global economic growth and demand for palm oil.
“The impact from restrictions placed by India on imports of refined palm oil will also be negative to the industry. Nevertheless, this will not affect our focus and determination to improve our financial performance as we continue to rely on the group’s resilience,” he added.
Group managing director Mohamad Helmy Othman Basha is confident that the group remains on track in its strategies of increasing profit contribution from its downstream segment, improving operational efficiencies in its upstream operations as well as in maintaining disciplined management of cost and liquidity.
On outlook, Sime Darby Plantation said the expectation of a slowdown in crop production in Malaysia and Indonesia in 2020 has resulted in the price recovery of palm products. However, the rise in prices is expected to be moderated over concerns on the global economic growth with the outbreak of the Covid-19.
Moreover, restrictions placed by India on imports of refined palm oil may have an impact on these prices. Despite these uncertainties, other factors such as biodiesel mandates in Malaysia and Indonesia are expected to keep palm product prices resilient in the near term.
