Sime Darby Plantation warns of challenging 2023 as Q1 profit plummets
FIRST-QUARTER profit for Malaysia’s Sime Darby Plantation Berhad plunged 90 per cent year-on-year, the company said on Wednesday (May 24), due to falling palm prices and higher costs.
The world’s largest planter warned the year ahead will remain challenging as profit for the January-March period plummeted to RM69 million (S$20.3 million) from RM718 million a year earlier, while revenue shrank 7 per cent to RM4.07 billion (S$1.2 billion).
“Our performance was affected by the sharp decline in average crude palm oil prices and the impact of the prolonged labour shortage in Malaysia, which is only now in the nascent stages of recovery,” group managing director Mohamad Helmy Othman Basha said in a bourse filing.
The world’s largest crude palm oil producer by land size also cited lower production of palm fruit bunches and higher finance costs due to increased benchmark interest rates.
Malaysia’s benchmark crude palm oil prices have plunged 18 per cent so far this year, partially due to increased competition with top producer Indonesia and lacklustre demand.
The edible oil traded at RM3,417 (S$1,003) a tonne on Wednesday afternoon.
Sime Darby said prices are expected to hover around current levels in the near term with price competitiveness being dependent on the supply outlook of competing oils and Indonesia’s palm oil export policies.
“Macroeconomic and geopolitical challenges, including concerns of slowing economic growth and high interest rates could limit the upside potential of commodity prices,” it said.
Lower demand and higher stockpiles in major importing countries could also pose further challenges to prices, Sime Darby Plantation said, adding that it expects the year to remain challenging throughout.
Mohamad Helmy said the firm’s highest priority is to rehabilitate its upstream operations in Malaysia and reduce its dependency on manual labour by using mechanisation and automation. REUTERS
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