KUALA LUMPUR (May 23): Boustead Plantations Bhd net profit for the first quarter ended March 31, 2018 (1QFY18) slumped 82.2% to RM5.26 million, from RM29.56 million a year earlier, due mainly to lower prices of palm products.

In a filing with Bursa Malaysia, Boustead Plantations said revenue for the quarter fell 18% to RM154.60 million, from RM189.02 million.

Earnings per share dipped to 0.23 sen, from 1.32 sen previously.

The group declared its first interim dividend of 2.50 sen per share to be paid on June 27.

On its prospects, Boustead Plantations said its profitability is influenced by crop production and crude palm oil (CPO) prices.

For the current financial year, the proposed sale of 138.89ha of Malakoff Estate would contribute positively to its earnings, the group said.

The group went on to explain that global vegetable oil production in 2018 is forecast to exceed consumption and this was likely to suppress demand for palm oil and in turn, push inventiory levels up.

“Although the price outlook for CPO is not encouraging, the European Union’s removal of anti-dumping duty for biodiesel from Indonesia is positive news for the sector, coupled with the likelihood of higher tariffs on U.S. soybean by China, which may lend support to palm oil as a potential edible oil substitute.

“In addition, the possibility of crude mineral oil prices remaining above US$70 per barrel could encourage more biodiesel production in Indonesia using palm oil as feedstock,” the filing said.

At midday break, Boustead Plantations fell 0.73% or 1 sen to RM1.35, with 992,600 shares done.

In a separate statement, Boustead Plantations' vice chairman Tan Sri Lodin Wok Kamaruddin said it was a challenging first quarter, as lower palm product prices impacted the group.

“The year ahead is expected to see an increasing supply of alternative vegetable oils, putting pressure on demand for CPO and leading to increased palm oil inventories.

“Moving forward, we are confident on prospects, as we remain focused on strengthening operational efficiencies, coupled with strategic expansion of our plantation land bank.

“To this end, the recent acquisition of 11,579 hectares (ha) of land in Sabah is set to contribute positively to the group, while the proposed acquisition of 5,500ha of plantation land and a palm oil mill in Sabah will further boost our earnings, over the long-term,” Lodin said.