KUALA LUMPUR (Aug 26): TH Plantations Bhd reported a 47% jump in its net profit to RM7.58 million or 0.86 sen per share for the second quarter ended June 30, 2016 (2QFY16) from RM5.15 million or 0.58 sen per share a year ago, supported by the gradual recovery in commodity prices.

"We are encouraged by significantly better commodity prices, which have helped support the group's performance. After a prolonged period of weather anomalies, the group's FFB (fresh fruit bunch) and CPO (crude palm oil) production are showing signs of gradual recovery," TH Plantations chief executive officer and executive director Datuk Zainal Azwar Aminuddin said in a statement today.

"Compared to the previous quarter of this year, our FFB production in 2QFY16 grew by 29% quarter-on-quarter, and we are optimistic that production will show even more significant recovery in the coming quarters of this year," he added.

Zainal Azwar said the group expects to perform better in 3QFY16 if CPO and palm kernel (PK) prices continue to trade at supportive levels.

Revenue for the quarter increased 20% to RM132.41 million from RM110.18 million in 2QFY15.

"This increase [in revenue] is mainly attributed to higher volume for CPO and PK and higher average realised prices of CPO, PK and FFB," said the group in a bourse filing.

For the first half of the financial year (1HFY16), net profit, however, plunged 96% to RM433,000 from RM11.72 million in 1HFY15 partly due to lower other income. Revenue rose 15% to RM221.92 million from RM192.48 million.

TH Plantations expects its performance to be subdued for the remainder of its financial year, in line with the overall dampened expectations for the plantation industry.

"The industry and the group's performance in 2016 thus far has been adversely affected by the severe dry conditions brought upon by the El Nino phenomenon since 2015.

"Although FFB production and yields have shown some signs of improvement, the recovery is expected to be gradual while CPO prices are anticipated to remain volatile amidst demand and supply uncertainties," it said.

Despite the soft outlook, the group said the long-term fundamentals of the palm oil sector remain attractive, with the group to continue its long-term development and consolidation plans.

"The industry was disheartened by poor performance in the previous few quarters, particularly the first quarter of this year, but I am pleased to see that most industry players, TH Plantations included, have managed to remain resilient and withstand the challenges faced.

"We hope that the worst is over for the palm oil sector, and that the industry will continue to be buoyed by the positive recovery seen in both production and commodity prices. Nevertheless, amid the recovery, we should continue to be mindful of keeping our costs in check to ensure our margins improve sustainably," said Zainal Azwar.

TH Plantations shares closed down 2 sen or 1.79% at RM1.10 today, bringing a market capitalisation of RM981.08 million.