KUALA LUMPUR (Aug 23): Sime Darby Plantation Bhd (SDP), whose quarterly earnings grew 31.6% year-on-year (y-o-y) to RM812 million in the second quarter ended June 30, risks losing an estimated 1.2 million tonnes of unharvested Fresh Fruit Bunch (FFB) and loose fruits a year if the shortage of labour continues.

The plantation group declared an interim dividend of 10 sen per share to be paid on Nov 18.

The group’s managing director Mohamad Helmy Othman Basha said:“We are short of 4,000 harvesters right now. The shortage is actually lower in January. But we have been losing workers because they want to go back and so on.

“On average one harvester harvests about one tonne (of FFB) a day and there are 300 working days in a year. A simple calculation would be one tonne a day with 4,000 people short. In a whole year we are looking at 1.2 million (tonnes) in losses,” said Mohammad Helmy during a virtual press conference on SDP's second quarter financial result in financial year 2022.

He added, approximately 60,000 hectares of total planted area are affected due to shortage of workers.

Currently, SDP has 240,000ha mature hectares while the workforce shortage represents 38% against a total requirement of 11,159 harvesters.

He added that even with the arrival of the new workers, it may not be enough to meet the needs of the second half 2022 peak harvest period which is in October and November.

“The workers will come in stages. They need some lead time to become skilled harvesters. But at least they can cover a small portion of the shortages we are facing now. But they can’t fully cover the needs of the harvesting activities.

“At the same time existing workers are also leaving and we are trying to incentivise them to stay longer with us to cover the lack of manpower in the plantations during the peak crop period,” he added.

He added that although the group is actively involved in recruiting locals to plug the gap in the workers supply, they are mostly hired for other general works and not for labour-intensive harvesting work.

The longer the FFB and loose fruits are left unharvested the more it will be affect the Oil Extraction Rate (OER).

“The shortage of harvesters also leads to extended harvesting intervals, resulting in high off-spec quality bunches and loose fruits affecting OER,” he added.

SDP’s OER fell slightly to 21.26% in 2Q22 compared with 21.63% in 2Q21.

For 2Q21 ended June 30 2022, SDP’s net profit rose 31.6% year-on-year (y-o-y) to RM812 million from RM617 million, driven by its upstream and downstream segments and non-recurring activities.

In a Bursa Malaysia filing on Tuesday, the plantation group said revenue for the quarter rose to RM5.59 billion from RM4.41 billion earlier.

Earnings per share was 11.7 sen against nine sen previously.

For the six months ended June 30, SDP said its net profit increased to RM1.53 billion from RM1.18 billion a year prior, on the back of revenue of RM9.97 billion versus RM8.08 billion previously.

On CPO price outlook SDP is hopeful it will trade between RM3,000 and RM4,000 with an upside of RM4,500 per tonne.

At the time of writing the CPO future contract for November was trading at RM4,237 per tonne.

SDP said that in the second quarter, average realised CPO prices increased by 44% y-o-y to RM5,213 per tonne, while average realised PK prices rose by 40% y-o-y to RM3,339 per tonne.

Sime Darby's share price fell 2.2% and closed at RM4.40 on Tuesday.