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Harvesters’ shortage to impact Sime Darby profit
calendar25-08-2022 | linkDaily Express | Share This Post:

24/08/2022 (Daily Express), Kuala Lumpur - Profit from Malaysia is likely to be affected by harvesters’ shortage but Sime Darby Plantation Bhd (SDP) is confident that other operations will be able to offset the fall.

Group managing director Mohamad Helmy Othman Basha said the group is facing a shortage of more than 4,000 workers, which presently has affected the harvesting process covering an area of 60,000 hectares.

Following this, the Malaysian operations can only produce less than half of the group’s total production in the first half of 2022.

“This is only applied to Malaysia, which makes up 50 per cent of our operations, but there is another 50 per cent that should be doing well because there should not be any impediment to our production in other countries,” he told reporters during SDP’s second quarter financial year 2022 (Q2FY2022) performance media briefing Tuesday.

To mitigate the issue, SDP will bring in at least 3,000 foreign workers in stages by the end of 2022.

It will also be capitalising on the months in which production usually declines, which will begin next month until November.

SDP also faces challenges from Indonesia following export restrictions.

Managing director Sime Darby Oils Mohd Haris Mohd Arshad said it needs to set aside one tonne of oil for the local market for every four tonnes of oil to be exported.

“That is slowing down our activities because you first have to find someone willing to buy for the local market. Only after you sell in the local market and to local buyers, can you export.

“So, that affects our operational efficiency,” he said.

Mohd Haris also said the firm lost an opportunity to sell because it was unable to export in May 2022 when the crude palm oil (CPO) prices were trading at above RM6,000 per tonne.

Overall, he said crude palm oil prices are likely to remain at the current range but slightly higher at RM4,500 by year-end.

The lowest price level is expected at RM3,500, he added.

SDP’s net profit surged 32 per cent to RM812 million in the second quarter (Q2) ended June 30, 2022, from RM617 million in Q2 2021, boosted by stronger realised average crude palm oil (CPO) and palm kernel (PK) prices.

Revenue climbed to RM5.59 billion from RM4.41 billion previously.

In Q2, the average realised CPO and PK prices jumped by 44 per cent and 40 per cent year-on-year (y-o-y) to RM5,213 per tonne and RM3,339 per tonne, respectively.

Fresh fruit bunch (FFB) production, however, was impacted by a prolonged labour shortage experienced in its Malaysian operations.