SDP Takes A Hit From Lower CPO Price, FY23 PAT Down 25% To RM1.86 Billion

Sime Darby Plantation Berhad registered a net profit of RM200 million in the fourth quarter of the financial year ended 31 December 2023 (4Q FY2023) bringing its full year net profits for FY2023 to RM1.86 billion, this however was lower compared to FY2022 when it registered RM562 million and RM2.48 billion respectively.

The group’s Malaysian unit reported upstream operations jumping 45% year-on-year in Fresh Fruit Bunch (FFB) production as a result of intensive rehabilitation efforts, with the steady return of foreign harvesters to Malaysia. This strong performance has led to a 15% and 6% YoY increase in overall FFB production for the Group in 4Q FY2023 and FY2023 respectively.

SDP said the higher overall FFB production helped mitigate the impact of lower average realised crude palm oil (CPO) and palm kernel (PK) prices recorded in 4Q FY2023. CPO prices declined by 8% YoY to an average of RM3,688 per metric ton (MT) as compared to RM4,005 per MT, whilst average realised PK prices declined marginally by 1% YoY to RM1,742 per MT from RM1,756 per MT in 4Q FY2022.

Sime Darby Oils (SDO), the Group’s downstream operations, recorded a two-fold increase in its profit before interest and tax (PBIT) to RM183 million in 4Q FY2023, an increase from RM89 million recorded the previous corresponding quarter. SDO’s strong performance was supported by its European operations which mitigated the impact of lower margins in its Asia Pacific operations.

In 4Q FY2023, the Group’s non-recurring PBIT of RM55 million was mainly from the disposal of land in Malaysia.

As for outlook, the group expects CPO demand to remain steady in the longer term though seasonally high stockpiles in key destination countries may impact short-term demand. The Group is also cognisant of continued geopolitical risks and predictions of moderating global economic growth, which may impact demand.

Barring any unforeseen circumstances, the Group remains positive as it looks ahead to another satisfactory performance in FY2024.

The Group has declared a final dividend of 6.05 sen per share, which together with the interim dividend of 3.25 sen per share and special interim dividend of 5.70 sen per share, translates to a total single tier dividend of 15.00 sen per share for FY2023.

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