KUCHING: High fresh fruit bunches (FFB) output and lower production costs have significantly lifted group net profit of Sarawak Oil Palms Bhd (SOP) to RM121.6 million in third quarter 2024 (3Q2024) from RM94.55 million in 3Q2023 or up by RM27.2 million (29%).
The improved performance was in tandem with group revenue growth to RM1.38 billion from RM1.27 billion during the same period or an increase RM108 million (9%).
This drove up company’s earnings per share to 13.66sen from 10.62sen.
SOP has declared an interim dividend of 7sen per share, up from 4sen per share in 3Q2023, bringing total dividends to 11sen so far this year.
In 3Q2024, SOP posted higher group pretax profit of RM170 million (3Q2023:RM129.3 million) mainly attributed to increase in FFB production and lower production costs, the Miri-based company said in explanatory notes to its financial results.
The current quarter’s financial results also bettered that of the immediate preceding quarter (2Q2024) when group net profit was lower at RM105.68 million (3Q2024:RM121.8 million) and lower revenue of RM1.14 billion (RM1.38 billion).
Besides the higher volume of FFB production, a favourable fair value movement in the derivate also contributed to the higher earnings in the current quarter under review.
In 3Q2024, SOP recorded higher simple average palm products’ realised prices; palm oil products to RM4,205 per tonne (2Q2024:RM4,157 per tonne) and palm kernel products to RM2,960 per tonne (RM2,826 per tonne).
On a nine-month period in 2024 (9m2024), SOP group net profit soared to RM306.95 million (9m2023:RM186.84 million) or up by 64 per cent on higher revenue of RM3.85 billion (RM3.66 billion, up by 5%). SOP group owns 42 oil palm estates with total planted area of 82,369 hectares (matured 80,091 hectares) as at December 31, 2023, four CPO mills and one downstream complex.
On prospects going forward, SOP said: “The performance of the group would continue to be driven by the cyclical FFB production, global world edible oil price movement, effect of supply chain on fertilisers, chemicals and fuel prices which will affect the costs of production.
“The group is taking effective steps to improve its production through aggressive recovery programme, including cost control and replanting programme.
Notwithstanding this, (oil palm) industry will continue to face challenges in view of global economic conditions and softening of commodity prices.”
Meanwhile, BLD Plantation Bhd has also reported improved earnings, with group net profit climbed to RM9.62 million in second quarter to September 30, 2024 (2Q2024) from RM7.1 million in 2Q2023 despite a sharp fall in group revenue to RM457.4 million from RM590.35 million.
This pushed up earnings per share to 10.29sen from 7.59sen.
The company said lower sales volume had caused the RM132.9 million drops in group revenue in the current quarter under review.
However, the group pre-tax profit jumped to RM16.3 million from RM13.6 million in 2Q2023 as a result of favourable changes in foreign exchange and derivatives.
The 2Q2024 group pre-tax profit more than doubled to RM16.3 million from RM7.1 million in the immediate preceding quarter (1Q2024), thanks to the combined effects of higher sales volume and favourable changes in foreign exchange during the current quarter.
In first half of 2024 (1H2024), BLD group revenue surged to RM14.2 million from RM7.77 million in 1H2023 over shrinking group revenue of RM884 million from RM975.2 million recorded previously.
“In a similar manner, the group’s revenue decreased by about RM91.2 million during the current financial period as compared to the preceding year which was principally due to lower sales volume.
The group reported a profit before tax of about RM23.4 million for the current financial period as compared to the preceding year’s profit before tax of approximately RM15.8 million, mainly arising from favourable changes in foreign exchange and derivative during the current quarter,” added BLD.
Commenting on prospects, BLD said the outlook of the palm oil market remains positive, driven by anticipated stronger demand in the key importing markets despite several challenges, such as on-going geopolitical risk, monetary tightening, unpredictable weather conditions, development of biodiesel policies and narrow price spreads of the palm oil and soft oils.
“While palm oil production is expected to slow down, the palm oil prices are poised to see a modest upward movement with exports on the rise in the latter half of 2024.
Demand from India and China is anticipated to shift back to palm oil with its competitive pricing compared to soft oils, presenting a favourable opportunity to the palm oil market.
“With the evolving global trends, the group will continue to monitor the market dynamics and adapt strategy to remain resilient and thrive amidst the challenges ahead.
“In addition to enhancing the group’s operational efficiency by streamlining processes, the group focuses on its replanting programme to sustain productivity in the years to come,” added the company.
