This article first appeared in The Edge Financial Daily on May 24, 2018

KUALA LUMPUR: Boustead Plantations Bhd’s net profit fell 82.2% to RM5.26 million in the first quarter ended March 31, 2018 (1QFY18) from RM29.56 million a year ago, on lower palm product prices.

This results in a lower earnings per share of 0.23 sen in 1QFY18 compared with 1.32 sen in 1QFY17. Quarterly revenue also dropped 18.2% to RM154.6 million from RM189.02 million a year ago.

Nevertheless, the group declared a first interim dividend of 2.5 sen for the financial year ending Dec 31, 2018 (FY18), payable on June 27.

Boustead Plantations said average crude palm oil (CPO) selling price for 1QFY18 was RM2,491 per tonne, 21% lower compared with RM3,166 per tonne in 1QFY17, while average palm kernel oil price declined by 32% to RM2,188 per tonne.

Fresh fruit bunch production for 1QFY18 rose 8% to 226,323 tonnes, largely due to improved yields post El-Nino. Average oil extraction rate was 20.5%, a slight reduction from 1QFY17, while average kernel extraction rate was marginally higher at 4.5%.

Boustead Plantations vice-chairman Tan Sri Lodin Wok Kamaruddin said the year ahead is expected to see an increasing supply of alternative vegetable oils, putting pressure on demand for CPO and leading to increase in palm oil inventories.

“However, the CPO market could benefit from the likelihood of higher tariffs by China on US soybean as well as the European Union’s removal of anti-dumping duty on Indonesian biodiesel,” he said in a statement yesterday.

“Going forward, we are confident of 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 11,579ha 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.

“The proposed disposal of 139ha of land targeted to be completed by 3Q 2018 is also expected to contribute further to our earnings,” added Lodin.