KUALA LUMPUR (Sept 25): Plantations group United Malacca Bhd returned to the black with a net profit of RM36.95 million in the first quarter ended July 31, 2019 (1QFY20) against a net loss of RM18.49 million a year ago, mainly lifted by a one-off RM53.89 disposal gain.

Excluding the gain on disposal, the group narrowed its pre-tax loss to RM13.72 million from RM20.95 million previously, as its plantation and investment holding segments narrowed losses. Quarterly revenue grew 8.31% to RM43.33 million from RM40 million a year ago, its stock exchange filing today showed.

The group said it continues to be affected by lower average prices of crude palm oil (CPO) of RM1,961 per tonne, versus RM2,354 per tonne in the previous year, and palm kernel (PK) of RM1,113 per tonne versus RM1,757 per tonne a year earlier.

High production cost in both its Sabah and Indonesian plantations also ate into its profitability, offsetting the 31% overall improvement in fresh fruit bunch production seen during the quarter.

Moving forward, the group foresees FY20 to be challenging as it expects CPO prices to remain soft. Nevertheless, it expects higher FFB production for the year due to the recovery of its oil palm trees, which were affected by adverse weather in the past two years, and improved productivity.

It added the group’s priority remains focused on improving labour productivity and cost efficiency, as well as increasing FFB yield.

United Malacca shares did not trade today. They last closed at RM5.15, which valued it at RM1.08 billion.