KUALA LUMPUR, Feb 22 (Reuters) - Malaysia’s Sime Darby Plantations, the world’s largest oil palm planter by land holdings, on Thursday said its second-quarter net profit rose by 34 percent versus a year ago, on the back of improvements in fresh fruit bunch production (FFB).
Sime Darby Plantation announced net profits of 429 million ringgit ($109.52 million) for the quarter ending in December and revenue of 4.09 billion ringgit.
This compares with net profits of 319 million ringgit and revenue of 3.9 billion ringgit in the corresponding quarter a year ago. Conglomerate Sime Darby Berhad spun off its plantation division in a separate listing in November.
“The group’s FFB production improved by 2 percent from 2.72 million metric tonnes in 2Q 2017 to 2.76 million tonnes in 2Q 2018 as it recovers from the impact of El Nino,” the company said in a statement filed to the Bursa Malaysia at the midday break.
“Barring any extreme weather abnormalities, the group expects the full year FFB production to improve from the previous financial year as the El Nino effect tapers off in line with increased FFB output in the oil palm industry.”
The company added that the government’s introduction of an export tax suspension on crude palm oil, along with demand during upcoming holiday periods, will support demand for the tropical oil.
Malaysia announced a three-month suspension on crude palm oil export taxes at the start of 2018 to boost demand and reduce local inventory levels.
Other factors such as crude oil prices, biodiesel mandate implementations, the ringgit’s performance and competition from other edible oils are also likely to impact crude palm oil’s market price, said Sime Darby Plantation.
Sime Darby Plantation’s shares were trading 0.2 percent higher before the break, outperforming the benchmark index which was down 0.1 percent.
Shares of the plantation company debuted on Nov. 30 at 5.60 ringgit, and have dropped 1.1 percent since then. ($1 = 3.9170 ringgit) (Reporting by Emily Chow; Editing by Christian Schmollinger)