KUALA LUMPUR, May 22 (Reuters) - Malaysia’s Sime Darby Plantation reported a sharp jump in first-quarter net profit, but warned volatile palm oil prices and disruptions due to the coronavirus pandemic will impact its performance for the rest of the year.
The world’s largest palm oil planter by land size logged an unaudited net profit of 394 million ringgit ($90 million) from continuing operations, versus 90 million ringgit a year earlier.
The stronger performance was due to higher contributions from its upstream operations, downstream operations Sime Darby Oils and lower finance costs, it said on Friday.
Sime Darby, however, cautioned it expected to “face challenges due to disruptions in logistics and supply chain in the event of a prolonged global pandemic”.
“The domino effect of the looming global recession eventually may spill over to the palm oil industry impacting the group’s value chain as well as the global demand for palm oil,” group Managing Director Mohamad Helmy Othman Basha said.
Global lockdowns and restrictions to movement to contain the coronavirus outbreak have slammed crude palm oil prices this year. They have shed 30% since January and were trading at around 2,156 ringgit per tonne on Friday.
While the curbs have not yet had any material impact on the group’s operations, Chairman A. Ghani Othman said Sime Darby “remains cognisant that it will continue to face a challenging environment” as countries worldwide grapple with the spread of the virus and manage the economic fallout of the health crisis. ($1 = 4.3610 ringgit) (Reporting by Mei Mei Chu; Editing by Himani Sarkar)