KUALA LUMPUR (July 24): United Plantations Bhd's (KL:UTDPLT) net profit rose 17% to RM185.94 million in the second quarter ended June 30, 2024 (2QFY2024) from RM159.02 million a year earlier, on higher profits from both the plantation and refinery segments.

As a result, earnings per share were higher at 44.83 sen for 2QFY2024 compared with 38.34 sen for 2QFY2023.

Quarterly revenue came in 16% higher at RM546.08 million in 2QFY2024 from RM470.07 million a year earlier, due to the increase in revenue for the plantation and refinery segments in the current quarter mainly as a result of higher crude palm oil (CPO) and palm kernel (PK) prices.

No interim dividend was proposed for 2QFY2024.

The improved second-quarter performance lifted its net profit for the first half ended June 30, 2024 (1HFY2024) to RM318.81 million, up 18% year-on-year from RM271.11 million, while revenue rose 10% to RM1.02 billion in 1HFY2024 from RM930.06 million a year earlier.

In a filing with Bursa Malaysia on Wednesday, United Plantations said in 2QFY2024, palm oil prices traded from a high of RM4,443 per tonne to a low of RM3,767 per tonne. At the end of June, prices had recovered to RM4,000 per tonne, mainly as a function of lower-than-expected production in Malaysia and Indonesia, weather related concerns and an improved demand for palm oil In China.

It noted that the key factors to watch during the anticipated peak production months of July, August and September will be how production in Malaysia and Indonesia will perform and if there will be any significant stock build. So far, weather has been favourable within the Malaysian and Indonesian plantation sectors.

"The global economic growth sentiments for the remainder of 2024 is another factor that will influence both equity and commodity prices. So far indications are that interest rates will be staying higher for longer which no doubt will impact the global economic growth sentiment notably in countries that are loaded with high debt. This, coupled with the escalation of geopolitical conflicts and their impact on global supply chains, will affect business and consumer spending and ultimately also determine the demand for vegetable oils and fats.

"Amid the global uncertainties and challenges management remains focused on its operations and is taking various means to improve on our yields, costs and productivities. This aim is pursued through ongoing mechanization initiatives and through the replanting of older, less productive oil palm stands with our latest in-house high yielding planting materials. These efforts are vital for our ability to remain competitive and profitable as increasing labour costs, energy, chemicals and building materials are expected to remain at high levels, thereby exerting upward pressure on our cost base," it added.

Based on the current palm oil prices and its focus on securing the budgeted crop in the remaining part of 2024, United Plantations expects results for the financial year ending Dec 31, 2024 (FY2024) will be satisfactory.

United Plantations shares closed unchanged at RM24.98 on Wednesday, giving it a market capitalisation of RM10.4 billion. The stock has risen 39.87% so far this year.