KUALA LUMPUR (Aug 19): Plantation company TSH Resources Bhd's (KL:TSH) second-quarter net profit rose 6.7% to RM52.51 million from RM49.23 million in the same quarter a year ago, on better extraction rates, lower costs and stronger joint-venture contributions.

The stronger earnings for the quarter ended June 30, 2026 (2QFY2026) came despite revenue slipping 6.6% to RM250.98 million from RM268.78 million amid lower sales volume and softer average selling prices for crude palm oil (CPO), its bourse filing on Wednesday showed. No dividend was declared for the quarter.

Despite the revenue contraction, the group's core palm products division registered a 10.4% increase in operating profit to RM87.68 million from RM79.41 million, as it recorded a rebound in Indonesian fresh fruit bunch (FFB) production, higher oil extraction rates and palm kernel extraction rates, alongside a reduction in operating expenses.

Nevertheless, overall total FFB production during the quarter was flat, as higher production in Indonesia was offset by lower output from Sabah operations, mainly due to a smaller harvesting area following accelerated replanting activities over the last two years.

For the quarter under review, average CPO selling prices dropped 3% to RM3,580 per tonne from RM3,695 per tonne a year ago, while CPO sales volume contracted 5% to 51,407 tonnes. The group also absorbed higher Indonesian export levies and duty on CPO, which surged 77% year-on-year to RM45.77 million.

For the six months ended June 30 (1HFY2026), the group's net profit dropped 24.2% to RM73.80 million from RM97.42 million in 1HFY2025, as revenue fell 16.2% to RM456.18 million from RM544.11 million. This was largely due to lower overall FFB output after a high-yield cycle and severe flooding in West Sumatra, besides its ongoing replanting programmes in Sabah. The group also saw lower realised CPO prices during the period.

Going forward, TSH expects CPO prices to remain relatively stable in the second half of 2026, supported by steady export demand and firm energy prices, although it cautioned that outlook would continue to depend on geopolitical and trade-policy developments.

"The B50 biodiesel policy implemented from July 1, 2026, is expected to increase domestic CPO consumption and support CPO and FFB prices, albeit moderated by export levies and duties," the planter said.

The group added it will accelerate new planting programmes, including on the recently acquired lands in Central Kalimantan.

"The group remains positive on its long-term growth prospects, underpinned by its operating cash flow, a sound financial position and the expected seasonal improvement in FFB production in the second half of the year," TSH said, adding it "remains confident of delivering a satisfactory performance for the financial year 2026".

TSH shares closed two sen or 1.7% higher at RM1.23 on Wednesday, valuing the group at RM1.58 billion.