KUALA LUMPUR (April 25): Chin Teck Plantations Bhd’s net profit surged sevenfold for the financial quarter ended Feb 29, 2024 (2QFY2024) thanks to higher palm oil production as well as lower operating and administrative expenses.

Net profit leapt by 612.2% to RM20.8 million from RM2.92 million a year earlier. Quarterly revenue increased by 11.1% year-on-year (y-o-y) to RM51.26 million from RM46.14 million, thanks to increased sales volume of fresh fruit bunches (FFB), crude palm oil (CPO) and palm kernels (PK).

The group has not declared any further interim dividend for the financial quarter under review. It previously declared a first interim dividend of eight sen per share and a special dividend of four sen per share for the current financial year ending August 31, 2024 (FY2024), which was paid on Jan 31.

In its bourse filing on Thursday, Chin Teck reported higher production of FFB, CPO and PK for the quarter under review. It noted a 14.3% y-o-y increase in FFB purchase and production, an 18.1% increase in CPO production and a 14.3% increase in PK production.

“The average selling prices of FFB and CPO were lower. However, the average selling price of PK was higher,” it added.

At the same time, administrative expenses declined due to the absence of expenses associated with the acquisition of Fauzi-Lim Plantation Sdn Bhd in 2QFY2023, the group said, while operating expenses for the plantation decreased.

The group had in 2022 acquired Kelantan-based planter Fauzi-Lim Plantation for RM45 million, cash.

Chin Teck also reported a turnaround for its associate and joint ventures segment with a profit of RM684,000, compared to a net loss of RM4.02 million in 2QFY2023, due to the contribution of its oil palm plantation in Indonesia.

The turnaround of its Indonesian operation is due to the commencing of harvesting activities and mill operations at its plantations in the Lampung province.

In the previous financial years, the unrest in the surrounding villages located in the vicinity had caused disruption in routine harvesting of FFB, which led to losses in its Indonesian operations, said Chin Teck.

However, harvest of its oil palm plantations in the South Sumatera province is still pending clearance by relevant authorities.

For the six-month period ended Feb 29, 2024 (6MFY2024), net profit increased by 49.3% to RM42.13 million from RM28.22 million. Revenue climbed 4.9% to RM114.44 million from RM109.1 million, due to an increase in sales volume despite lower average selling prices.

Looking ahead, the group expects FFB production to increase, which would have a corresponding effect on plantation profit for FY2024.

Shares of Chin Teck were down five sen or 0.66% to RM7.50, valuing the group at RM685 million.