Lower palm prices pull Malaysia Boustead Plantations’ Q1 profit down 82.2%
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Boustead Plantations Bhd saw its net profit slump 82.2% to RM5.26 million for the first quarter ended March 31, 2018 compared with RM29.56 million in the previous corresponding period, dragged by lower prices of palm products.
Revenue also fell 18.2% to RM154.6 million from RM189.02 million.
Boustead Plantations has proposed to declare an interim dividend of 2.5 sen per share for the quarter under review.
The group said in a filing with the stock exchange that the average crude palm oil (CPO) selling price was at RM2,491 per metric tonne (MT), 21% lower compared with RM3,166 per MT in the same quarter last year, while average palm kernel oil price declined 32% to RM2,188 per MT.
Fresh fruit bunches (FFB) production for the quarter increased 8% to 226,323 MT, largely due to improved yields post El-Nino. Average oil extraction rate was slightly lower 20.5%.
Boustead Plantations vice chairman Tan Sri Lodin Wok Kamaruddin said 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.”
At the midday break, Boustead Plantations shares fell 1 sen or 0.7% to RM1.35 on some 992,600 shares done.
Questions & Answers
Q.What caused the significant drop in Boustead Plantations' net profit during the first quarter?
What caused the significant drop in Boustead Plantations' net profit during the first quarter?
The company's net profit fell due to lower prices for palm products, specifically crude palm oil and palm kernel oil. The average crude palm oil selling price was 21% lower than last year, and palm kernel oil price declined by 32%.
Q.Did the company's production volumes change despite the fall in profits?
Did the company's production volumes change despite the fall in profits?
Yes, fresh fruit bunches production actually increased by 8% to 226,323 metric tonnes for the quarter. This was largely attributed to improved yields following the El-Nino weather phenomenon, despite a slightly lower average oil extraction rate.
Q.What is the outlook for the palm oil market in the year ahead, according to Boustead Plantations' vice chairman?
What is the outlook for the palm oil market in the year ahead, according to Boustead Plantations' vice chairman?
The vice chairman anticipates increased supply of alternative vegetable oils, which will likely put pressure on crude palm oil demand and lead to higher inventories. However, the market might benefit from potential higher tariffs by China on US soybean and the EU removing anti-dumping duty on Indonesian biodiesel.
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