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KUALA LUMPUR: Sime Darby Plantation Bhd expects the second half of 2023 to remain challenging as the price volatility in crude palm oil (CPO) prices continue in the near-term due to prevailing uncertainties.
Challenges notwithstanding, group managing director Datuk Mohamed Helmy Othman Basha said the aggressive ongoing rehabilitation of Malaysia’s upstream operations is starting to show results with improvement in FFB production in 2Q.
“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.
“As we approach the peak production period in the coming months, the group is looking forward to continued improvement of our performance in the second half of 2023,” he said in a statement.
In the second quarter of its 2023 financial year, Sime Darby Plantation posted a net profit of RM380mil, down from RM812mil in the same quarter in 2022, resulting in earnings per share contracting to 5.5 sen from 11.7 sen previously.
The board of directors declared an interim dividend of 3.25 sen, payable on Nov 17, 2023.
Revenue in the quarter under review was RM4.31bil, down from RM5.59bil in the comparative quarter.
For the six months period to June 30, 2023, the group registered a net profit of RM449mil as compared to RM1.53bil in 1HFY22 and revenue of RM8.37bil as compared to RM9.97bil.
According to Sime Darby Plantation, the decline in profits was primarily due to lower average realised CPO and palm kernel (PK) 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.
During the second quarter, the group said FFB production declined 2% year-on-year due to a 6% reduction in the group’s Indonesian FFB production.
In the downstream segment, Sime Darby Oils recorded a lower profit before interest and tax (PBIT) of RM124mil in 2QFY23 from RM275mil a year earlier.
“Although 2023 has had its challenges, I believe the group is well-positioned to weather any storms that may lie ahead.
“Programmes that are underway across the Group will ensure that shareholders value is preserved in the shorter term and enhanced in the medium and longer terms,” said chairman Tan Sri Nik Norzrul Thani Nik Hassan Thani.
