KUALA LUMPUR (Feb 18): Sime Darby Plantation Bhd's (SDP) net profit more than tripled to RM468 million in the fourth quarter ended Dec 31, 2021 (4QFY21), compared with RM149 million a year ago, driven by both upstream and downstream segments.

This resulted in higher earnings per share of 6.8 sen for 4QFY21 from 2.2 sen in 4QFY20, its bourse filing showed.

Quarterly revenue jumped 52.51% to RM5.55 billion from RM3.64 billion in 4QFY20.

It also declared a final dividend of 12.38 sen per share, more than double the 5.42 sen dividend paid in the previous year. The ex-date of the dividend is April 27, while the payment date falls on May 17.

"In 4QFY21, the group's upstream segment recorded a profit before interest and tax (PBIT) of RM958 million, 173% more than 4QFY20's PBIT of RM351 million. This strong showing was supported by higher realised crude palm oil and palm kernel prices, which increased from an average of RM2,664 to RM4,179 and from RM1,673 to RM3,363 per metric tonne, respectively. Furthermore, oil extraction rate improved to 21.79% from 21.35% in 4QFY20," the group said in a statement.

The group's downstream segment, Sime Darby Oils, also rebounded from a PBIT of RM7 million in 3QFY21 to a record quarterly PBIT of RM287 million in 4QFY21, representing a 42% year-on-year (y-o-y) improvement from RM202 million recorded in the previous year. The improvement was mainly attributable to improved sales volumes by its European operations and higher margins from its Asia-Pacific bulk operations, it added.

"Although fresh fruit bunch (FFB) production was lower, strong prices boosted the group's performance, resulting in all segments recording higher y-o-y profit," it stated.

For full FY21, SDP hit record levels once again, with net profit surging 90.46% to RM2.26 billion from RM1.19 billion, while revenue grew 42.92% to RM18.7 billion from RM13.08 billion.

Its group managing director Mohamad Helmy Othman Basha said that although the group closed FY21 with an outstanding set of results, the path ahead remains challenging. He is referring to the US Customs and Border Protection issuing a finding that certain SDP palm oil products were produced using convict, forced or indentured labour on Jan 28 this year.

"Though the finding came as a disappointment. We are forging ahead to address all the challenges, keeping the welfare and well-being of our workforce as our top priority. Whilst the group embarks on reimbursing recruitment fees and related costs to current and past foreign workers that may have been charged by third-party agents in source countries, we are also looking forward to the completion of the independent assessment of our Malaysian operations," he said.

On Thursday (Feb 17), the group's 15,078 current foreign workers were reimbursed an aggregate sum of RM38.55 million for recruitment fees they might have incurred to secure employment with the group. The reimbursements were paid in a single lump sum to the foreign workers.

Meanwhile, the group has implemented several measures to improve its existing governance structures, policies and procedures. These include continuing to comply with its policy of not employing undocumented workers in its operations, extending its enhanced policies and standard of operations to include its contractors and vendors. The group will also ensure that all contract workers are legally employed, in possession of their passports and are at least paid minimum wages.

The group will also be looking to continue to address the current acute labour shortages by reducing its dependence on manual labour.

"Our focus on the mechanisation, automation and digitalisation of our plantation operations will be another top priority for us in 2022 as we look towards reinventing the nature of work in our plantations and intensifying our efforts to recruit more local workers.

"We believe 2022 will be a transformative year for the group," he added.

Looking forward, the group expects palm oil prices to remain elevated, at least throughout the first half of 2022 as supplies are only anticipated to increase in the second half of the year in line with the high-crop season.

With the recent decision by the Malaysian government to lift the freeze on the intake of foreign workers, which has been in place since June 2020, the group is cautiously optimistic that this may provide further support for its FFB production, particularly its Malaysian operations, to increase in the second half of the year, in line with palm oil's typical peak production period.

Hence, the group expects its performance for FY22 to be satisfactory.

At noon market break, shares of SDP were unchanged at RM4.91, giving it a market capitalisation of RM33.96 billion.