KUALA LUMPUR (Aug 18): Sime Darby Plantation Bhd's (SDP) second quarter ended June 30, 2021 (2QFY21) net profit jumped 63.2% to RM617 million from RM378 million a year ago. This comes on the back of its revenue growing 37.2% to RM4.41 billion from RM3.22 billion in the previous corresponding quarter.
The plantation group, which expects its financial performance for the current financial year to be "promising", declared an interim dividend of 7.9 sen per share for 2QFY21, higher than the 4.02 sen per share declared in 2QFY20.
The substantially higher earnings were attributed to the sharp rise in crude palm oil (CPO) prices, and palm kernel (PK) prices, on top of the increase in fresh fruit bunch (FFB) production.
For 2QFY21, SDP's CPO price realised amounted to RM3,623 per metric tonne (mt), 54% higher than 2QFY20's realised price of RM2,361 per mt. SDP's realised price for CPO in the cumulative six months ended June 30, 2021 (1HFY21) was also higher at RM3,422 per mt, compared with RM2,475 per mt in 1HFY20.
For 1HFY21, SDP's net profit expanded 39.4% to RM1.18 billion from RM846 million a year ago. Revenue increased 29% to RM8.08 billion from RM6.26 billion previously.
Segment wise, the group's profit before interest and tax (PBIT) for its upstream segment more than doubled to RM1.33 billion for 1HFY21 from RM604 million in the previous corresponding period. This was due to high CPO and PK prices realised at RM3,422 and RM2,312 per mt, said the group in a press release.
The group also saw its FFB production increase 2% year-on-year, driven by improved production at its Indonesian operation.
For its downstream segment, PBIT also doubled to RM253 million in 1HFY21 compared to RM113 million a year ago, largely from better sales volumes and margins in the Asia-Pacific, said the group.
SDP group managing director Mohamad Helmy Othman Basha commented that the plantation group has performed well despite the challenges it is facing in the current environment, which include labour shortages and the Withhold Release Order imposed by the US Customs and Border Protection on Malaysian products.
"The board and management are focused on protecting shareholder value and building on our strong foundation, while finding new solutions, to effect and implement the necessary improvements," he added.
It said that its operations in Indonesia and Papua New Guinea are forecast to register higher FFB productions this year on the back of better weather conditions, thus mitigating the impact of prolonged labour shortages on all its Malaysia plantations.
As such, FFB production for FY21 will remain comparable with FY20.
"With the continued impact of labour shortages on Malaysia's CPO production as well as tight global vegetable oil inventory levels, the group expects prices to remain firm," it further elaborated.
At the noon break, SDP's share price was at RM3.92, valuing the plantation group at RM27.11 billion.