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Thursday, May 24, 2018

Boustead Plantations Q1 profit falls

Thursday, 24 May 2018

BPB vice-chairman Tan Sri Lodin Wok Kamaruddin (pic) reckoned that the first quarter was challenging as lower palm product prices impacted the group.

PETALING JAYA: Boustead Plantations Bhd

image:’s (BPB) net profit fell 82.2% to RM5.26mil in the first quarter ended March 31 from RM29.56mil in the corresponding quarter, on lower prices of palm products.

Despite the earnings slump, the upstream oil plantation company had declared a first interim dividend of 2.5 sen per share.

During the quarter in review, BPB’s revenue fell 18.2% to RM154.6mil from RM189.02mil in the previous corresponding period.

The company’s earnings per share declined to 0.23 sen from 1.32 sen previously.

For the quarter under review, the average crude palm oil (CPO) selling price was RM2,491 per tonne, which was 21% lower compared with RM3,166 per tonne in the corresponding quarter last year, while average palm kernel oil price declined by 32% to RM2,188 per metric tonne.

Fresh fruit bunches (FFB) production for the quarter increased by 8% to 226,323 tonnes, largely due to improved yields post El-Nino.

Average oil extraction rate was 20.5%, a slight reduction from last year’s corresponding period, while average kernel extraction rate was marginally higher at 4.5%.

According to Lodin, there remained pressure on CPO due to increasing supply of alternative vegetable oils.

“The year ahead is expected to see an increasing supply of alternative vegetable oils, putting pressure on demand for CPO and leading to increased palm oil inventories.

“However, the CPO market could benefit from the likelihood of higher tariffs by China on US soybean as well as the European Union’s removal of anti-dumping duty on Indonesian biodiesel,” he said in a statement yesterday.

Nevertheless, Lodin said BPB would remain focused on strengthening its operational efficiencies, coupled with a strategic expansion of its plantation landbank to improve its prospects.

“To this end, the recent acquisition of 11,579 hectares (ha) of land in Sabah is set to contribute positively to the group while the proposed acquisition of 5,500 ha of plantation land and a palm oil mill in Sabah will further boost our earnings over the long term,” Lodin said.

“The proposed disposal of 139 ha of land targeted to be completed by the third quarter of 2018 is also expected to contribute further to our earnings,” he added.

For the quarter under review, BPB’s business in the Peninsular region recorded a lower profit of RM11mil.

This was mainly due to significantly lower palm product selling prices.

FFB crop increased 3% to 92,906 tonnes.

The Sabah region, on the other hand, posted an operating profit of RM3mil.

This was a decline from the previous year’s corresponding quarter. While FFB crop grew by 24% to 104,652 tonnes, this was impacted by reduced selling prices and higher operating expenditure.

The Sarawak region registered a deficit of RM5mil due to lower palm product prices and crop production.

FFB crop for the period dropped to 28,765 tonnes.


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