United Plantations Bhd has posted a lower net profit of RM159.02 million in the second quarter (2Q) ended June 30, 2023 from RM184.63 million in the same quarter last year.
Revenue dipped to RM470.07 million in the quarter compared to RM701.26 million previously, due to the decrease in revenues for the plantation and refinery segments, it said in a filing to Bursa Malaysia today.
For the first half (1H) of 2023, the group’s net profit rose to RM271.11 million from RM244.33 million in the same period last year, while revenue declined to RM930.06 million from RM1.34 billion previously.
United Plantations said the lower revenue from the plantation segment in 1H 2023 was due to lower crude palm oil (CPO) and palm kernel (PK) production, as well as lower average prices.
CPO and PK production decreased by 6.8 per cent and 8.9 per cent year-on-year (y-o-y) respectively, and the average CPO and PK prices decreased by 4.3 per cent and 37.7 per cent y-o-y respectively in the current period, it said.
Meanwhile, revenue for the refinery segment fell by 37.3 per cent y-o-y to RM602.6 million in 1H 2023 from RM960.8 million in the corresponding period previously mainly due to lower CPO and crude palm kernel oil prices.
This segment made a strong recovery from a pre-tax loss of RM34.4 million in the corresponding period last year to a pre-tax profit of RM72.6 million in the current period, it added.
On prospects, United Plantations said it remained mindful of the challenges in 2H 2023 amid the uncertainties of high inflation and recession fears, coupled with the ongoing Russia-Ukraine war and its impact on global supply chains.
The group said, whilst the costs of energy, fertilisers, chemicals, building materials and spare parts have come down from earlier highs, they are still above levels experienced a few years ago, resulting in its cost base increasing to the highest levels ever.
United Plantations Bhd is mindful of the challenges which the second half of 2023 will bring, especially amidst the uncertainties of high inflation and recession fears coupled with the ongoing Russia-Ukraine war and its continued impact on global supply chains.
“Whilst costs of energy, fertilisers, chemicals, building materials and spare parts have come down from earlier highs, they are still above levels experienced a few years ago, resulting in our cost base increasing to its highest levels ever,” the plantation group said in the notes accompanying its financial results.
United Plantations said striving for cost efficiencies without compromising quality is crucial in its daily operations.
The group said with labour shortages improving due to border re-openings and an inflow of guest workers, the focus now lies on up-skilling these workers to enhance productivity and yields.
“This will be pursued relentlessly through continued mechanisation efforts and replanting of the older and less productive oil palm stands in order to take full advantage of our latest superior planting materials produced at our research department as a vital part of sustaining our positive development,” United Plantations said.
“Based on the current palm oil prices and the company’s focus on securing the budgeted crop in the second half of 2023, the board of directors expects that the results for the year will be satisfactory,” it said.
United Plantations noted that during the second quarter of 2023 prices have traded in a wide range between RM3,194 per tonne to RM3,995 per tonne for the third month position.
