Adobe Stock
Adobe Stock

Malaysia-based palm oil company Sime Darby Plantation Berhad (SDP)’s net profit tripled in the third quarter of this year to RM1.2bn (US$25.7M) compared to RM396M (US$84.82M) in the same period of the previous year.

The quarter’s strong performance boosted the group’s net profits for the nine-month period ended 30 September 2023 (9M FY2023) to RM1.7bn (US$36.4M), SDP said on 23 November.

SDP said the group’s upstream operations recorded a stronger performance in the third quarter of 2023, led by the strong recovery of its Malaysian operations, which saw a 38% year-on-year increase in fresh fruit bunch (FFB) production, due to an increase in harvesting personnel and intensive rehabilitation efforts.

The Malaysian production volume recorded in the third quarter was a 43% year-on-year increase and also represented 43% of total Malaysian production for the first nine months of 2023, the company said.

This resulted in a 14% year-on-year increase in overall FFB production for the Group, which mitigated the impact of lower average realised crude palm oil (CPO) and palm kernel (PK) prices.

“After the setbacks suffered between 2020 and mid-2023, we are seeing the results of months of rehabilitation work with an increased workforce … turning around our upstream Malaysia operations in the third quarter,” group managing director Mohamad Helmy Othman Basha said.

“We expect to achieve the full complement of harvesters for Sabah and Sarawak by the end of the year, and by mid-2024, these harvesters will acquire sufficient skills to be more productive.”

The group’s downstream operations - Sime Darby Oils (SDO) - recorded a lower profit before interest and tax (PBIT) at RM225M (US$48.1M) in the third quarter, down from RM337M (US$72.1M) in the same quarter of the previous year.

The decline was due to lower margins and volume demands in SDO’s Asia Pacific operations, although this was partially mitigated by strong results in its European operations, the group said.

Looking ahead, SDP said it was confident of achieving higher FFB production for the full year, mainly driven by improvements in labour productivity and field conditions in its Malaysian operations.