Sime Darby Plantation’s 4Q net profit tumbles 64% on lower prices, flags high stockpile
22/02/2024 (The Edge Malaysia), Kuala Lumpur - Sime Darby Plantation Bhd, the world’s largest palm oil producer by acreage, said on Thursday that its net profit fell more than 64% in the fourth quarter from a year earlier, weighed by lower average realised prices.
Net profit for the quarter ended Dec 31, 2023 (4QFY2023) fell to RM200 million compared to RM562 million over the same period a year earlier, the company said in an exchange filing. Revenue decreased 6.88% year-on-year (y-o-y) to RM5.28 billion, from RM5.67 billion recorded for 4QFY2022.
Seasonally high stockpiles in key destination countries may impact “short-term demand” along with geopolitical risks and slower global economic growth, Sime Darby Plantation said. However, volatile weather conditions are likely to raise supply concerns, providing support for pam oil prices this year, it said.
Prices of crude palm oil in the said quarter declined by 8% y-o-y to average RM3,688 per metric tonne, from RM4,005 per metric tonne. Fresh fruit bunches’ production meanwhile, rose 15% to 2.39 million tonnes in 4QFY2023, from 2.07 million tonnes over the same three-month period in 2022.
Sime Darby Plantation declared a final dividend of 6.05 sen per share, bringing the full FY2023 total dividend to 15 sen per share, amounting to RM1.04 billion. This is lower than the total dividend of 16.04 sen per share or RM1.11 billion paid for FY2022.
For the full year (FY2023), net profit was RM1.86 billion, 25.24% lower than RM2.49 billion registered a year earlier. Full-year revenue declined 12.37% to RM18.43 billion, from RM21.03 billion.
The company, however, is optimistic that production “growth will sustain” in FY2024, after rising 6% to 8.71 million tonnes in FY2023, thanks to improved labour conditions and the rehabilitation of Malaysian upstream operations.
Shares of Sime Darby Plantation rose four sen or 0.88% to RM4.56 at Thursday’s noon break, ahead of the results announcement, giving it a market value of RM31.54 billion.