Boustead Plantations expects challenging FY23 performance

KUALA LUMPUR: Boustead Plantations Bhd’s (BPlant) profitability in the current year is contingent upon the trends in crude palm oil (CPO) prices and the performance of crop production.

“Output is expected to rise through the third quarter on the back of seasonal trend and easing labour shortages. Palm prices will likely remain stable in the short term on positive sentiments following the crude oil price increase and uncertainties surrounding soft oil production,” the planter said in a filing with Bursa Malaysia.

On the weather front, the slowdown in rainfall so far is conducive for harvesting. However, the industry is concerned about the upcoming El Nino event, which will bring prolonged dry conditions to plantations in Indonesia and Malaysia.

Fortunately, production for this year is unlikely to be affected by El Nino since the impact on yield usually comes with a time delay.

“Considering all the factors that may impose limitations, the group expects financial year ending Dec 31, 2023 (FY23) performance to remain challenging,” BPlant said.

The group posted a net loss of RM5.5mil, or loss per share of 0.25 sen against a net profit of RM73.2mil, or earnings per share of RM3.27.

Revenuer for the quarter dropped to RM201.2mil from RM348.9mil previously.

In a statement, BPlant said it recorded a profit before taxation and zakat (PBT) of RM7mil for the first six months ended 30 June 2023 (1H23), on the back of a revenue of RM401mil.

It said the substantial drop in palm product prices, which affected the valuation of closing stock and fresh fruit bunches, resulted in a decline in profitability for the group during the period under review.

Average CPO price for the six-month period stood at RM3,971 per tonne, a decrease of 37% from RM6,327 per tonne recorded in last year’s corresponding period.

Similarly, palm kernel (PK) average price saw a significant reduction of 50% to RM2,118 per tonne.

BPlant acting chief executive officer Fahmy Ismail said output is expected to rise in the third quarter of 2023 on the back of seasonal trends and easing labour shortages.

“Furthermore, the slowdown in rainfall so far produces a favourable setting for harvesting. However, the upcoming El Nino event is expected to bring prolonged dry conditions to plantations in Indonesia and Malaysia. Considering all these factors, the group expects FY23 to continue to be challenging,” he said.

“Despite the volatile environment, the group remains focused on our strategic direction to ramp up mechanisation and continue with replanting activities and digitalisation of our operations.

“We are confident that over the long-term, these efforts will improve productivity and put the group on a stronger footing to drive sustainable growth, going in parallel with our unyielding commitment to the principles of environmental, social and governance,” Fahmy said.