Sarawak Plantation 3Q net profit edged higher by 3.8% on lower cost of sales

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KUALA LUMPUR (Nov 22): Sarawak Plantation Bhd’s net profit for the third quarter of the financial period ended Sept 30, 2018 (3QFY18) edged higher by 3.8% to RM9.34 million or 3.34 sen per share compared with RM9 million or 3.22 sen per share recorded in 3QFY17 due to the effects of lower cost of sales.

According to the filing with Bursa Malaysia, the plantation group saw an increase in operating profits due to the effects of lower cost of sales, which was partially offset by lower realized average selling prices and sale volumes of crude palm oil (CPO) and palm kernel (PK) during the current quarter.

This was despite the group’s revenue falling by 21.5% to RM83.6 million from RM106.5 million recorded in 3QFY17.

“Revenue of the oil palm operations decreased by RM22.8 million to RM83.4 million in the current interim quarter compared to RM106.2 million reported in the corresponding period of the preceding year. The decrease was principally attributed to the effect of lower realized average selling prices of CPO and PK and lower sales volume of CPO and PK,” said the plantation group in the note filed with the stock exchange.

As for the first nine months for the period ended Sept 30, (9MFY18), Sarawak Plantation’s net profit slipped by 56.9% to RM10 million compared with RM23.2 million recorded during the corresponding period a year ago, mainly due to the effects of lower realized average selling prices and lower sales volume of CPO and PK during the first nine months this year.

This was despite the group recognizing profit arising from changes in fair value of biological assets of RM2.4 million during the current interim period compared to a loss of RM2.2 million recognized in the corresponding period a year ago.

In line with the decline, the group’s revenue for 9MFY18 was also lower by 26% to RM221.5 million from RM299.1 million recorded in 9MFY17.

It added that the group's current focus on transformation and reform of the management, strengthening and improving the standard operating procedures with the ultimate goal to achieve a better yield for the current financial year is starting to bear results.

“The group anticipates an improved production volume in the coming quarter following the improvement of field conditions. Barring any unforeseen circumstances, the Board is confident that with these improvements in place, the Group will achieve satisfactory results in the current financial year,” it said.

As of closing, Sarawak Plantation’s shares were untraded at RM1.65, giving it a market capitalisation of RM461.3 million.