KUALA LUMPUR – Sime Darby Plantation Bhd’s net profit surged to RM610 million in the third quarter ended September 30, 2021, from RM190 million previously, mainly driven by the stronger upstream segment.
Revenue jumped to RM5.06 billion from RM3.18 billion in the same period last year, it said in a filing with Bursa Malaysia.
“Upstream operations reported a strong profit before interest and tax (PBIT) of RM913 million, more than triple the PBIT of RM273 million recorded in the previous year’s corresponding quarter, primarily due to higher average crude palm oil (CPO) and palm kernel prices realised as well as an improved oil extraction rate.
“The key drivers compensated for the 2% decline in the production of fresh fruit bunches during the current quarter,” the company said in a statement.
The group’s downstream segment, via Sime Darby Oils, faced a challenging quarter as its PBIT declined to RM7 million from RM71 million in the previous year, mainly attributed to the lower profits generated by its Asia Pacific operations.
“The Asia Pacific bulk operations incurred unrealised loss on commodity hedges for the current quarter due to a rising CPO price landscape but this was partially mitigated by improvements in overall margin and sales volume.
“Although the differentiated subsegment has seen a growth in sales volume, the decline in margin dragged down its reported profits,” it added.
The plantation group expects palm oil prices to remain elevated at least until the end of the year before a possible downward adjustment in the second quarter of next year when supplies are anticipated to improve.
“The high prices will help compensate for the impact of labour shortages on the group’s Malaysian upstream production.
“The group expects demand to remain strong as more countries ease their Covid-19 restrictions, bringing back earlier suppressed demand.
“Barring any unforeseen circumstances, the group expects an overall strong financial year performance for 2021,” it said. – Bernama, November 18, 2021
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