Hap Seng Plantations' Q4 earnings rise on higher CPO prices, stronger sales volume.
26/02/2025 (New Straits Times), Kuala Lumpur - Hap Seng Plantations Holdings Bhd's net profit surged fourfold in the fourth quarter, driven by higher average selling prices (ASPs) and sales volume of crude palm oil (CPO).
Net profit stood at RM85 million for the quarter ended Dec 31, 2024, up from RM20.7 million in the same quarter last year, while revenue rose 33.7 per cent to RM233 million from RM174.6 million.
In a bourse filing today, Hap Seng said the ASPs of CPO and palm kernel for the quarter at RM4,791 and RM3,538, respectively, were significantly higher compared to RM3,798 and RM2,128 previously.
CPO sales volume also increased by four per cent to 41,292 tonnes from 39,824 tonnes.
However, the group noted that palm kernel sales volume was seven per cent lower at 8,946 tonnes compared to 9,584 tonnes previously due to lower production which was mainly affected by lower kernel extraction rate.
Hap Seng Plantations declared a second interim dividen of 11 sen a share to be paid on March 27, 2025.
Culmulatively, the plantation firm's net profit more than doubled to RM204.6 million in the financial year 2024 (FY24), up from RM91 million a year earlier.
Revenue for the period increased by 12.7 per cent to RM752 million from RM667.8 million.
Hap Seng Plantations said the palm oil stock levels in the first quarter of 2025 are expected to be influenced by the seasonal low production of fresh fruit bunches.
This is due to wet weather conditions, stronger demand for the Chinese New Year festive season and restocking ahead of the Ramadan month.
The company said palm oil, which continues to trade at a premium over other competing vegetable oils, has resulted in some shift of demand in certain major palm oil importing countries to other vegetable oils.
"The implementation of Indonesia's B40 biodiesel mandate and the increase of the Indonesian's export levy on CPO from 7.5 per cent to 10 per cent to fund higher subsidies for its biodiesel program will constrain global palm oil supply and augurs well for the global palm oil market.
"This will also benefit Malaysia's palm oil exports which will be more price competitive to the Indonesian palm oil," it said.
Hap Seng Plantations said the increase in Malaysia's minimum wage and the proposed Employees Provident Fund contribution for foreign workers at two per cent will raise production costs, though this will be partly offset by a higher windfall tax threshold in Sabah.
"The group will continue to put concerted efforts to improve the overall efficiencies of its operations to mitigate the higher cost of production whilst practising good plantation husbandry to further improve fresh fruit bunches yield and extraction rates.
"Based on the foregoing, the group expects its results for the FY25 to be influenced by movements in commodity prices," it added.