KUALA LUMPUR (Sept 26): United Malacca Bhd registers a higher net loss of RM18.49 million for the first financial quarter ended July 31, 2018 (1QFY19) from RM316,000 a year ago, on lower production of fresh fruit bunches (FFB) but expects production to improve in the second half. Even so, it warned of challenges in the financial year owing to depressed crude palm oil (CPO) prices and the adoption of a new accounting framework.

Revenue plunged 43% year-on-year to RM40 million from RM70.33 million.

In a bourse filing, the company said FFB yield dropped to 2.79 tonnes per hectare from 3.78 tonnes per hectare in the previous year due to adverse wet weather. Average prices of CPO were also lower at RM2,354 per tonne in 1QFY19 compared to RM2,721 in 1QFY18, while palm kernel prices averaged RM1,757 compared to RM2,070.

In addition, the impact of 2,184 hectares of young matured palms in Sabah with high unit production costs contributed to the plantation loss.

United Malacca expects FFB production to pick up in the second half of its financial year, but cautioned that the adoption of Malaysian Financial Reporting Standards (MFRS) effective FY19 could impact its performance as the framework requires the value of bearer plants (previously known as biological assets) to be amortised and additional depreciation provided for long-term leasehold land.

In the first quarter, for instance, the total impact of the new framework amounted to RM6.81 million.

Assuming CPO prices remain at the current level coupled with the amortisation of bearer plants and additional depreciation of long-term leasehold land, the group expects the financial year to be challenging.

United Malacca closed down 1 sen or 0.16% to RM6.14 today, for a market capitalisation of RM1.29 billion.