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EARNINGS for palm oil producer Mewah Group plunged 79 per cent in the fourth quarter as the firm recorded lower sales and higher tax expenses.
Mewah made a net profit of US$1.8 million for the three months ended Dec 31, 2015, down from US$8.7 million a year ago. This translates to earnings of 0.12 US cent per share, compared with 0.58 US cent in the fourth quarter of 2014.
Revenue tumbled 35 per cent to US$540.3 million as sales volume and average selling prices both fell. The firm has been selective in choosing customers and participating in trade flows amid the tough environment, said chief financial officer Rajesh Chopra.
Income tax expenses more than tripled to US$4 million, from US$1.1 million, due to changes in deferred tax arising from a tax incentive granted during the year that caused a reassessment of past tax liabilities.
For the full year, however, Mewah's net profit more than doubled to US$6.5 million despite a 22 per cent slide in revenue to US$2.7 billion, as it trimmed cost of sales and expenses.
Looking ahead, Mewah expects the increasing gap between production and demand to keep pressure on palm oil producers and, in turn, refiners.
"While current concerns on El Nino provide some support to CPO (crude palm oil) prices in the short term, overall palm oil industry is expected to remain under pressure until the global outlook improves," it said in the results statement. "The group will continue to operate cautiously during these tough and challenging times."
The group has proposed a dividend of 0.45 Singapore cent a share for the full year, compared with 1.7 cents in FY2014.
The counter closed 0.5 Singapore cent, or 1.7 per cent, higher at 29.5 Singapore cents on Friday, before the results announcement.