Sime Darby Plantation's 1Q net profit soars more than 6 times on land disposal gain

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KUALA LUMPUR (Nov 16): Sime Darby Plantation Bhd's net profit for its first quarter ended Sept 30, 2017 (1QFY18) soared more than six times to RM1.02 billion from RM151 million in the previous year, mainly due to a RM676 million gain from a sale of land to fellow subsidiary Sime Darby Property Bhd.

Revenue increased 26% to RM3.54 billion from RM2.82 billion a year ago. Earnings per share rose to 169.8 sen in 1QFY18 from 25.2 sen in 1QFY17.

In a filing to Bursa Malaysia today, it said higher earnings from its upstream operations arising from the recovery of fresh fruit bunches (FFB) production based on the El Nino effect and higher crude palm oil (CPO) prices also contributed to this increase, together with a one-off reversal of accrual for donation of RM95 million and lower finance costs incurred.

For the quarter under review, FFB production increased by 25% to 2.696 million metric tonne (MT) and the average CPO price realised was 4% higher at RM2,693 per MT as compared to the previous corresponding quarter, it said.

Its upstream services in Malaysia registered the highest profit for the quarter under review inclusive of the gain from sale of land and one-off reversal of accrual for donation. Excluding both of this, the segment recorded a profit of RM305 million, which was 39% higher than the corresponding period of the previous year.

Downstream operations registered profit of RM70 million during the quarter under review — 5% lower than the corresponding period of the previous year.

The group said it was mainly attributable to lower profit generated by its refineries in Malaysia and Europe due to lower sales volume as well as lower margin due to higher feedstock costs.

Moving forward, the group said it will continue to focus its efforts on accelerating the replanting exercise to improve yields and reduce costs for a long-term sustainable performance.

"The group expects a continued year-on-year recovery due to the coming of maturity of additional planted areas and the progression of existing mature areas into higher yielding age brackets," it said.

It added that it expects CPO prices to be sustained at above RM2,500 per MT up to March 2018.