KUALA LUMPUR (Feb 17): Despite a year-on-year (y-o-y) decline in both fresh fruit bunch (FFB) production and realised crude palm oil (CPO) prices, Sime Darby Plantation Bhd’s net profit for the fourth quarter ended Dec 31, 2022 (4QFY2022) rose 20.34% to RM562 million, from RM467 million a year earlier.
In a bourse filing on Friday (Feb 17), the oil palm planter attributed the rise in earnings to lower non-recurring loss and tax charges, which offset the 2% and 4% drop in FFB production and realised CPO prices respectively.
Earnings per share climbed to 8.1 sen, from 6.8 sen previously. Quarterly revenue increased 2.16% to RM5.67 billion versus RM5.55 billion earlier. The group declared a final dividend of 6.04 sen per share, with an April 27 ex-date, to be paid on May 15.
Meanwhile, Sime Darby Plantation announced in a separate filing that the group has appointed Employees Provident Fund (EPF) CEO Datuk Seri Amir Hamzah Azizan to its board as a non-independent and non-executive director, effective Friday.
As at Feb 8, the EPF had a 12.711% direct stake or 879.06 million shares in Sime Darby Plantation and indirectly, 102.98 million shares or a 1.489% stake.
For the full year ended Dec 31, 2022 (FY2022), Sime Darby Plantation’s net profit climbed 10.33% to RM2.49 billion from RM2.26 billion a year prior, on the back of a strong showing from its downstream operations. Full-year revenue rose 12.49% to RM21.03 billion versus RM18.7 billion last year.
The group said its downstream operations, Sime Darby Oils (SDO), achieved a profit before interest and tax (PBIT) of RM859 million in FY2022, 61% higher than the previous year.
“Meanwhile, higher average realised CPO price, a 20% increase on the previous year, mitigated the 10% decline in FFB production,” Sime Darby Plantation said in a statement, adding that FFB production in Malaysia was impacted by the labour shortage.
In addition to SDO’s solid performance, Sime Darby Plantation said the group’s bottomline was bolstered by higher contributions from the group’s other operations which rose 10% y-o-y, as well as higher non-recurring profits of RM291 million arising from gains on the disposal of land in Malaysia.
Looking forward, Sime Darby Plantation expects CPO prices to remain steady in 1QFY2023, on the back of continued strong demand due to the considerable price advantage versus alternative oils, as well as supply concerns.
“However, demand may be impacted by the global economic outlook, which remains wary because of continuing geopolitical uncertainties, stricter ESG (environmental, social and corporate governance) policies, and inflationary pressures from high food and energy prices.
Nevertheless, Sime Darby Plantation said it is cautiously optimistic, backed by its well-established strategies to address ESG issues, and ongoing efforts to mitigate such challenges.
“The group has also ramped up operational improvement initiatives to plug any leakages and reduce wastage,” it added.
Touching on Malaysia’s labour shortage, the group said the issue continues to be addressed with the arrival of more foreign workers into Malaysia and therefore, expects FFB production in Malaysia to improve in 2023.
At noon break on Friday, shares in Sime Darby Plantation were down five sen or 1.15% at RM4.30, giving the group a market capitalisation of RM29.74 billion.