Thursday 28 Mar 2024
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KUALA LUMPUR (Nov 12): United Plantations Bhd’s net profit fell 4.1% to RM94.85 million in its third quarter ended Sept 30, 2018 (3QFY18), from RM98.93 million a year ago, mainly due to lower palm prices.

Revenue contracted by 8.1% to RM340.86 million during the quarter, from RM370.82 million in 3QFY17, according to the group’s bourse filing today.

The group declared an interim dividend of 20 sen per share and a special dividend of 10 sen per share, payable on Dec 12.

In notes accompanying its financial results, United Plantations attributed the weaker quarterly earnings to the decreased revenue at its plantation and refinery segments, by 10.8% and 13.9% respectively.

It said its plantation revenue was lower in the quarter, mainly due to the lower palm kernel (PK) price in its Malaysian operations, which fell by 24.1%, as well as lower crude palm oil (CPO) and PK prices in Indonesia, down 20.5% and 28% respectively.

It added that the increase in the group’s CPO and PK production, by 3.7% and 3.4%, helped cushion the decrease in revenue and higher cost of CPO production.

Over at its refinery segment, United Plantations said the decline in earnings was due to lower crude palm kernel oil prices during the period.

Additionally, the group said its holding companies’ investments in Indonesia recorded a total of RM7.1 million in foreign exchange losses from loans denominated in Indonesian rupiah (IDR) extended to Indonesian subsidiaries, as a result of the weakening of IDR against the ringgit.

For the nine-month cumulative period (9MFY18), net profit slipped 2.6% to RM282.6 million, from RM290.21 million in 9MFY17. Cumulative revenue fell 11.7% to RM976.33 million from RM1.11 billion a year ago.

United Plantations said it expects prices to remain under pressure, largely because of the record high stocks in Malaysia and Indonesia, which will prevent the palm oil market from making any sudden price rally.

“With the prices contracted under our forward sales policy and with our Indonesian production improving coupled with large areas steadily coming into maturity from our replanted areas in Malaysia, the Board of Directors expects that the results for 2018 will be satisfactory.

“In accordance with its replanting policy, UP will continue to replant large areas of its older and less productive oil palm stands in Malaysia during 2018. Cost efficiencies and improved productivity will therefore continue as a vital part of sustaining our positive development,” it said.

Shares in United Plantations gained 40 sen or 1.5% to RM27 at market close today, bringing it a market capitalisation of RM5.1 billion.

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