KUALA LUMPUR (Nov 29): Palm oil producer Sarawak Plantation Bhd reported a 56.7% year-on-year drop in net profit to RM18.2 million in the third quarter ended Sept 30, 2022 (3QFY2022), on the back of lower sales volume of crude palm oil (CPO) and palm kernel (PK).

Revenue fell to RM161.8 million in 3QFY2022 from RM208.8 million in 3QFY2021, according to a filing to Bursa Malaysia on Tuesday (Nov 29). Basic earnings per share decreased to 6.55 sen in 3QFY2022 from 15.11 sen in 3QFY2021.

“The decrease was principally attributable to the lower sales volume of CPO and PK by 20.8% and 20.2% and lower realised average selling prices of CPO and PK by 3.3% and 4.1% respectively during the current interim quarter,” Sarawak Plantation said.

Total segment profit for its oil palm production was RM31.6 million against RM44.4 million in 3QFY2021.

Its mill operations contributed the most to oil palm operations’ revenue at RM146.3 million in 3QFY2022, followed by estate operations at RM71.6 million. But the contributions were lower compared to 3QFY2021, when mill operations contributed RM191 million and estate operations RM73.8 million.

For cumulative nine-month period (9MFY2022), Sarawak Plantation's net profit was lower by 3.8% to RM91.5 million from RM95.2 million in the preceding year's corresponding period. Revenue was slightly lower at RM546.8 million from RM552.8 million.

It said continuous labour shortage and rising operating costs, with rising inflationary pressures and production restraints arising from the labour shortage, impacted profit margins.

“Nevertheless, the labour shortage issue is expected to ease gradually following foreign workers intake,” said Sarawak Plantation.

It attributed the increase in revenue for 9MFY2022 to higher realised average selling prices despite the lower sales volume of CPO and PK.

Looking ahead, Sarawak Plantation projected that CPO was likely to sustain at the current level of between RM4,000 and RM4,200 per tonne.

“This is backed by high crude oil price as well as concerns over edible oil supplies following prolonged Russia-Ukraine conflict and weaker soybean production outlook,” it said. It expects to achieve satisfactory financial performance in FY2022.

At the time of writing, Sarawak Plantation’s share price was down two sen or 0.88% to RM2.25, which translates to a market capitalisation of RM630 million.