The Edge Markets (30/05/2018) - KUALA LUMPUR: TH Plantations Bhd’s net profit for the quarter ended March 31, 2018 (1QFY18) slumped 67.42% to RM3.23 million, from RM9.92 million a year ago, dragged by lower other income, lower profit margin income on investment, as well as high effective tax rate.

Quarterly revenue came in at RM121.24 million, a 26.89% drop from RM165.83 million a year ago, on lower selling prices of palm oil products.

For 1QFY18, TH Plantations said the average traded price for crude palm oil (CPO) decreased 22% RM2,443 per tonne, from RM3,119 per tonne recorded in the same period last year, while the average traded price of palm kernel fell 33% to RM2,093 per tonne.

“We achieved 14% growth in our Fresh Fruit Bunches production in 1QFY2018, marking five straight quarters of year-on-year increase in production,” TH Plantations chief executive officer and executive director Datuk Seri Zainal Azwar Zainal Aminuddin said in a media statement that was filed together with the latest earnings report with Bursa Malaysia today.

TH Plantation said its fresh fruit bunches (FFB) production for the quarter increased to 186,062 tonnes, while its CPO output decreased 12% to 36,842 tonnes.

According to Zainal Azwar, stronger production has not translated into higher revenues, mainly due to lower commodity prices.

“The industry has seen continued downward pressure on palm oil product prices, stemming from higher production and weaker demand for palm oil, exacerbated by the stronger ringgit in the early part of this year,” he said.

“Most industry players are impacted by the fall in prices and TH Plantations has not been spared,” he added.

On outlook, Zainal Azwar said TH Plantation’s production is expected to be “encouraging”, given better weather conditions and the improved age distribution of its planted areas.

“Even in the first quarter, when production is normally the lowest, we find that production has been good. Production in the second half of the year is expected to be more robust, as the second half is cyclically better for local palm oil producers.”

On the other hand, Zainal Azwar said palm-related prices are expected to face further pressure, particularly on expectation of higher production and high levels of inventories.

“However, we are hopeful that prices would at least remain range-bound for the year, supported by higher crude oil prices and demand for biodiesel,” he added.

Shares in TH Plantations, which is controlled by the pilgrim fund Lembaga Tabung Haji, dropped 4 sen or 6.02%, and closed at 62.5 sen today, for a market capitalisation of RM552.41 million.

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