United Malacca net profit down after MFRS adoption on top of low prices

This article first appeared in The Edge Financial Daily, on March 22, 2019.
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KUALA LUMPUR: United Malacca Bhd saw its net profit slide to RM2.36 million for third quarter of financial year 2019 (FY19) ended Jan 31, 2019, from RM10.29 million a year earlier, partly due to its adoption of the Malaysian Financial Reporting Standards (MFRS) framework.

Excluding the impact of MFRS adoption, the group said its pre-tax profit would be RM9.88 million, compared with RM3.3 million previously.

Quarterly revenue fell 17% to RM53.48 million from RM64.44 million in the previous corresponding period.

In a filing with Bursa Malaysia, the plantation group said it was also affected by the lower average price of crude palm oil (CPO) of RM1,892 per tonne, versus RM2,561 in the previous year, and palm kernel price of RM1,392 versus RM2,522 previously.

High unit cost of production at its 2,184ha of young matured oil palms in Sabah ate into its profitability as well, United Malacca said.

For the cumulative nine months ended Jan 31, 2019, United Malacca reported a net loss of RM28.21 million, compared to a net profit of RM21.78 million in the previous year, while revenue declined 32% to RM147.31 million from RM215.92 million.

The adoption of MFRS framework effective FY19 requires the value of bearer plants (previously known as biological assets) to be amortised and additional depreciation of long-term leasehold land to be provided.