Malaysia's Sime Darby Q1 profit up 2.4%

[KUALA LUMPUR] Malaysia's Sime Darby, the world's biggest listed palm-oil producer by acreage, announced on Friday a 2.4 per cent rise in net profit in the July-September quarter, mainly on the back of higher output.

The diversified conglomerate said net profit for its fiscal first quarter came in at 500.7 million ringgit (US$148.4 million), up from 489 million ringgit the same quarter last year.

"The plantation division was the biggest contributor to profit on the back of improvements in fresh fruit bunches production and oil extraction rate," Sime Darby said in a statement.

Revenue, however, slipped 4.3 per cent to 10.12 billion ringgit from 10.58 billion ringgit, amid recent weakness in crude palm oil prices.

Sime Darby said its motors division achieved better vehicle sales in Australia, New Zealand and Vietnam, while the conglomerate also saw profits increase from development projects launched by its property division, it said.

Mohamad Bakke Salleh, Sime Darby's president and group chief executive, said the company "continued to face significant challenges to the group, particularly lower average crude palm oil price realised and falling coal prices" during the quarter.

For the financial year, Sime Darby said it targeted a net profit of 2.5 billion ringgit despite the environment.

Sime Darby revealed in October that it had made an offer to buy Papua New Guinea's UK-listed New Britain Palm Oil for about US$1.74 billion.

The deal reflects a growing push by producers to increase capacity as demand for palm oil soars worldwide.

One of the most versatile and cheaply produced edible oils, palm oil is a key ingredient in a vast range of products, from snack foods to shampoo to make-up.

Demand has fuelled rapid growth of the industry, particularly in world leaders Malaysia and Indonesia, but also is blamed for hastening the destruction of dwindling tropical rainforests.

AFP