The Edge Malaysia (11/08/2026) - KUALA LUMPUR (Aug 11): SD Guthrie Bhd (KL:SDG), one of the world’s largest palm oil producers, expects crude palm oil (CPO) prices to remain firm for the rest of the year, potentially trading between RM4,600 and RM5,000 per tonne. Prices could rise to RM5,200 per tonne in the first quarter of 2027 (1Q2027) if El Niño conditions develop.

President and group chief executive officer Mohd Haris Mohd Arshad said in a briefing on Tuesday that past El Niño events in 2015 and 2022 had led to higher CPO prices.

CPO futures were up on Bursa Malaysia Derivatives at the time of writing on Tuesday.

The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange went up RM31 to RM4,661 per tonne. The October contract gained RM35 to RM4,758 per tonne, while November and December contracts rose RM34 each to RM4,824 and RM4,870 per tonne respectively.

Fertiliser costs locked in for 2026

Commenting on rising fertiliser costs, group chief financial officer Shahrizal Suhainy said SD Guthrie has secured its fertiliser needs for 2026 at RM1,700 to RM1,800 per tonne, limiting the impact of higher prices on earnings to about 1% of net profit.

The group has yet to lock in its 2027 requirements and is monitoring prices before negotiating with suppliers. Shahrizal explained that not all fertiliser types have been affected by the recent supply disruptions.

He said urea and ammonium chloride, which make up around 40% to 60% of the group’s fertiliser mix, have been affected by supply disruptions linked to the Middle East crisis and China’s export ban. Prices for these fertilisers rose 50% to 80% from pre-crisis levels but have since started to ease.

Haris expects 2026 to be a “solid year” following the group’s strong first-half performance.

“[El Niño's] impact on production this year will probably be nothing. We are still on track to actually deliver what we think is going to be a respectable year,” he said.

“Whilst we are bullish about prices, that is primarily because the premise is that production is going to disappoint due to El Niño development after this year,” he added.

Labour costs remain a pressure

Haris said higher labour costs remain a challenge for the group’s Malaysian upstream operations, driven by the higher minimum wage and workforce replacement costs. Productivity improvements will be key to managing the impact.

On its perpetual sukuk, SD Guthrie said it has fully redeemed the outstanding instruments, with no further redemptions expected in the coming quarters. The group redeemed RM2.2 billion of perpetual sukuk, which caused its finance costs to spike 65% year-on-year to RM43 million in the second quarter ended June 30, 2026 (2QFY2026), from RM26 million a year ago.

SD Guthrie's net profit nearly doubled to RM987 million in the second quarter, from RM505 million in the same quarter a year earlier, boosted by land sales and downstream earnings that offset lower revenue. Revenue for the quarter fell 4% year-on-year to RM4.94 billion.

For the first six months of 2026, net profit totalled RM1.55 billion, a 44% increase when compared to the same first half of 2025, while revenue declined 4% year-on-year to RM9.63 billion.

The group declared an interim dividend of 11.18 sen per share, payable on Nov 4.

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