KUALA LUMPUR (May 20): Sime Darby Plantation Bhd's net profit for the first quarter ended March 31, 2021 (1QFY21) rose 20.09% to RM562 million, from RM468 million a year ago, largely on the back of a better upstream segment performance in Indonesia, Papua New Guinea and the Solomon Islands.

The upstream segment, it said, performed better on the back of sustained higher crude palm oil (CPO) and palm kernel (PK) prices as well as increased fresh fruit bunch (FFB) production.

“The higher realised prices and increase in FFB production compensated for the lower oil extraction rate (OER), which was primarily the result of an acute labour shortage in Malaysia and adverse weather conditions in Indonesia,” it added.

Quarterly earnings per share (EPS) rose to 8.2 sen from 6.8 sen. Also supporting the bottom line was a growth in the downstream segment, which benefited from higher prices and sustainability premiums amid lower volume.

Combined, the better performance of the aforementioned segments more than made up for a weaker Malaysian upstream performance, as well as the absence of a gain on disposal recorded in 1QFY20. Minus the one-off gain of RM74 million, the group’s net profit was up 43% from RM394 million.

Quarterly revenue rose 20.66% to RM3.67 billion from RM3.04 billion.

In a statement, Sime Darby Plantation chairman Tan Sri Megat Najmuddin Megat Khas said the group is on track to achieve its FY21 financial targets.

“Whilst the sustained high CPO price has certainly been a boon to the industry, I am also encouraged by our operational performance despite the challenges presented by the Covid-19 pandemic,” he said.

CPO prices may soften in the second half of 2021 (2H21) as market production increases, the company said. It also expects its own production to improve this year.

On other operational matters, the group is working with several parties to address the withhold release order (WRO) imposed by the US Customs and Border Protection at the end of 2020.

The group had appointed a third-party assessor to undertake a comprehensive review of all its Malaysian operations, said group managing director Mohamad Helmy Othman Basha.

“This exercise is expected to be completed in June,” he added.

Shares in Sime Darby Plantation settled three sen or 0.68% higher at RM4.44 at the noon market break, valuing the group at RM30.57 billion.