KUALA LUMPUR, May 22 – Sime Darby Plantation Bhd’s (SD Plantation) net profit rose to RM394 million in the first quarter ended March 31, 2020 (Q1 2020) from RM90 million in Q1 2019.
Revenue improved to RM3.04 billion from RM2.99 billion previously.
In a filing with Bursa Malaysia today, the company attributed its performance to higher contributions from both upstream and Sime Darby Oils (downstream) operations and lower financing costs.
“With our continuous drive to improve operational efficiencies and reduce costs, SD Plantation has been able to capitalise on the industry’s brief respite from low crude palm oil (CPO) and palm kernel (PK) prices to record satisfactory results for Q1 2020.
“However, the group remains cognisant that it will continue to face a challenging environment as countries around the world grapple with the spread of the COVID-19 virus and manage the economic repercussions of the pandemic,” said chairman Tan Sri Abdul Ghani Othman.
Being a key ingredient for both food and non-food products, the demand for palm oil would remain intact in the long term, he said.
The group also believed that its focus on value creation strategy and prudent cost management would continue to place its operations and finances in a satisfactory position to weather the challenges ahead.
Meanwhile, it had also assessed the COVID-19 pandemic’s potential impact on its operations and financial performance, including rising risks of customers deferring or defaulting on contracts, customer credit risks and volatility from foreign exchange fluctuations.
On its outlook, it said the group’s performance for FY2020 ending Dec 31, 2020 would be impacted by the volatility of CPO and PK prices and impediment to operations, should a prolonged or worsening pandemic continue to affect global business activities.