MHC Plantations back in the black in 1Q on recovery in palm oil prices

MHC Plantations back in the black in 1Q on recovery in palm oil prices
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KUALA LUMPUR (May 18): A jump in overall prices of palm-oil related products lifted MHC Plantations Bhd’s net profit in its first financial quarter ended March 31, 2017 (1QFY17) up to RM4.67 million, from a net loss of RM227,000 a year ago. 

Revenue jumped 55.23% to RM90.45 million, against RM58.27 million in 1QFY16. In a bourse filing today, MHC Plantations attributed the uptick to an increase in prices of crude palm oil (CPO), palm kernels (PK), and fresh fruit bunches (FFB) by 33%, 59% and 42% respectively, compared to the same period last year. 

Empty fruit bunches (EFB) oil sale price also increased by 97%, it added.

The group has also increased FFB production by 30% in the period, and saw “an increase in efficiency of its biomass power plant in exporting electricity”, contributing to the better bottom line.

Quarter-on-quarter, MHC Plantations’ net profit saw near two-fold increase from RM1.61 million in 4QFY16, as a result of higher palm oil prices, better milling margins and lower administrative expenses. Revenue, however, declined by 15.63% in 1QFY17, from RM107.21 the previous quarter.

The company expects palm oil prices to remain stable in 2017. “The group expects a recovery of FFB production in 2QC17, as the El-Nino effect that reduced production from 2015 onwards is expected to fade in 2017,” it added.

It also expects better contribution from its power plant division, in line with upgrade of its biogas plant to produce 3.8 megawatt-hour (MWh), from 3MWh, which was completed last February.

Shares of MHC Plantations last closed 1 sen or 1.13% higher at 89.5 sen, valuing the company at RM173.94 million.