KUCHING: Sarawak Oil Palms Bhd’s (SOP) earnings in the January-March 2023 period (Q12023) have been significantly impacted by the lower realised selling prices of palm products, and higher production costs.
These factors have resulted in group net profit to fall sharply to about RM44.2 million from RM195 million in Q12022 (down 77 per cent) as revenue dropped by 16 per cent to RM1.21 billion from RM1.43 billion previously.
This drove down the company’s earnings per share to 4.96 sen from 22.73 sen during the same period.
“The group’s profit before tax for the current quarter was RM67.5 million compared with RM268.6 million reported in corresponding quarter last year. The decrease in profit before tax was mainly attributed to lower realised selling prices of palm products coupled with higher production costs when compared to Q1FY2022,” SOP said in its financial results.
As at Dec 31, 2022, SOP group had 84,487 hectares of oil palm estates, out of which 56,847 hectares (67 per cent) are in the prime age (11-20 years).
The group is also into refinery and other palm downstream processing activities.
The Q12023 financial results were also weaker as compared to the immediate preceding quarter (Q42022) when SOP posted group net profit of RM48.4 million on flat revenue of RM1.21 billion. Quarter-to-quarter, group pre-tax profit fell to RM67.5 million from RM77.8 million in Q42022 due to lower production of fresh fruit bunches (FFB) in the current quarter.
However, in Q12023, the group’s simple average palm products’ realised prices were higher at RM3,973 per tonne for palm oil products (Q42022: RM3,833 per tonne) and RM2,359 per tonne for palm kernel products (RM2,351 per tonne).
Commenting on prospects going forward, SOP said the group’s performance would continue to be driven by FFB production which is affected by labour shortage and global world edible oil price movement.
This, it added, is further exacerbated by the effect of supply chain on fertilisers, chemicals and fuel prices which will affect the costs of production.
“The group is taking steps to improve its production. Notwithstanding this, the industry will continue to face challenges in view of global economic conditions and softening of commodity prices,” it added.
