KUALA LUMPUR (Feb 28): Sime Darby Plantation Bhd has posted a net loss of RM45 million for the fourth quarter ended Dec 31, 2019 (4QFY19) on the back of a decline in fresh fruit bunch (FFB) production and contribution from Sime Darby Oils (Downstream) operations.

In a bourse filing today, it said the loss was, however, offset by higher crude palm oil (CPO) prices realised, lower finance costs and lower tax expense in the quarter under review.

In addition, the group also recorded a net loss of RM13 million from its discontinuing upstream Liberia operations.

The group changed its financial year end to Dec 31 from June 30 previously, so there is no comparative quarter.

However, for comparison, the group said it posted a net profit of RM172 million during the same period last year.

Meanwhile, revenue for 4QFY19 stood at RM3.37 billion.

For FY19, the group posted a net profit of RM122 million compared with RM729 million in the corresponding period last year, with its performance affected by lower CPO and palm kernel (PK) prices realised, as well as lower FFB production.

“This was partially offset by lower non-recurring losses, finance costs and a tax credit registered for the financial year,” it said.

Losses from its discontinuing Liberian operations and joint ventures in the oleochemical and biomass businesses amounted to RM322 million, mostly due to the impairment of assets in Liberia.

“The financial year 2019 proved to be challenging for the plantation industry and Sime Darby Plantation as we continued to face unfavourable weather conditions and the low CPO and PK prices for the most part of the year,” said its chairman Tan Sri A Ghani Othman.

On its outlook, group managing director Mohamad Helmy Othman Basha said he is confident that the group is still on track in its strategies of increasing profit contribution from its downstream segment, improving operational efficiencies in its upstream operations as well as in maintaining disciplined management of cost and liquidity.

“The group continues to place priority in its deleveraging efforts and completed the refinancing of its credit facilities worth approximately RM3.9 billion on marginally improved terms in December 2019.

“The refinancing exercise was rated as credit positive by Moody's Investors Service.

“This refinancing exercise has not only resulted in a lower cost of debt for us, but it has also strengthened our balance sheet and provided financial flexibility to manage our operations and finances.

“With this plan set in motion, we are one step closer to realising our aspirations to reduce the group’s gross gearing ratio from 49% as at Dec 31, 2019 to approximately 30% within the next three years,” added Helmy.

The group expects the recovery in palm product prices due to slower production in Malaysia and Indonesia this year to be tempered by concerns over global economic growth impacted by the Covid-19 outbreak.

“Moreover, restrictions placed by India on imports of refined palm oil may have an impact on these prices. Despite these uncertainties, other factors such as biodiesel mandates in Malaysia and Indonesia are expected to keep palm product prices resilient in the near term,” it said.

At 2.43pm, Sime Darby Plantation was down 12 sen or 2.43% at RM4.88 per share, giving it a market cap of RM33.87 billion.