This article first appeared in The Edge Financial Daily on November 30, 2018

KUALA LUMPUR: Sabah-based TSH Resources Bhd posted a core profit before tax (PBT) of RM33.7 million for the third quarter (3Q) ended Sept 30, 2018 as fresh fruit bunch (FFB) production rose 18% to 250,204 tonnes from 212,342 tonnes previously.

“High growth of FFB significantly mitigated the impact of the drop in average crude palm oil (CPO) price from RM2,576 to RM2,037 per tonne. The quarterly FFB production was also 13% higher than the preceding quarter this year,” the group said in a statement.

Net profit for the quarter fell to RM8.2 million from RM27.1 million previously, while revenue was flat at RM225.8 million

For the nine months ended Sept 30, 2018, core PBT came in at RM81.9 million, as FFB production grew 21% to 651,927 tonnes from 537,246 tonnes in the same period last year.

Moving forward, the group said it is focused on managing its unit cost of production by improving FFB output, yield per hectare and cost-controls.

It added that the recent announcement of mandatory implementation of B10 in Malaysia starting December will augur well for the industry.

Palm biodiesel uptake by Malaysia and Indonesia collectively is estimated to rise by 87% to reach 6.7 million kilolitres in 2019 from this year.

Indonesia’s announcement to remove CPO export levy is also expected to benefit purer upstream planters there, including TSH.

“This development is favourable to TSH with the FFB production largely coming from its upstream plantations in Indonesia,” it said.