November 29, 2019 / 7:06 AM / 15 days ago

Malaysia's Sime Darby Q3 profit slumps, sees little boost from palm oil rally

KUALA LUMPUR, Nov 29 (Reuters) - Malaysia’s Sime Darby Plantation Berhad, the world’s largest oil palm planter by land size, on Friday posted a 75% slump in its third-quarter profit and said it sees minimal boost to its annual performance from the recent rally in palm prices.

The plantation group said its third-quarter results slumped due to weaker palm oil and palm kernel prices and unpredictable weather conditions.

Palm oil prices, however, witnessed a rally for more than a month. Last week, the benchmark palm oil contract on the Bursa Malaysia Derivatives Exchange hit its highest in more than two years on prospects of lower production and stockpiles.

The company said in a statement to the stock exchange that given its committed forward sales, the recent spike in crude palm oil and palm kernel prices will have minimal impact on the group’s financial year ending Dec. 31.

“Nevertheless, should the prices continue to rally, the Group’s prospects will improve in the next financial year. By then, (the) legacy issues impacting the Group’s current results are also expected to be fully resolved,” Group Managing Director Mohamad Helmy Othman Basha said in the statement.

Net profit for July-September dived to 32 million ringgit ($7.67 million) from 126 million ringgit last year, while revenue came in at 2.82 billion ringgit.

The weaker performance was attributed to volatile commodity prices and unpredictable weather, but was partially cushioned by its Sime Darby Oils downstream operations, the company said.

“The results were also largely affected by the impairment charges for our assets in Liberia as we prepare to exit our business there,” Mohamad said.

The firm said efforts to discontinue operations comprising the Liberian operations and joint ventures in oleochemical and biomass resulted in a net loss of 309 million ringgit, mainly due to the impairment of assets in Liberia that amounted to 256 million ringgit.

Sime Darby Plantation announced in August that it had started talks with three parties on its plans to exit Liberia, and expected to divest its operations in the West African nation in the “next few months”.

($1 = 4.1700 ringgit)

Reporting by Mei Mei Chu, Editing by Sherry Jacob-Phillips

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