BOUSTEAD Plantation Bhd’s net profit increased by 3,460% year-on-year (YoY) to RM435.2 million in the first quarter ended March 31, 2022 (1Q22) due to higher operational profit attributable to the higher palm product prices paired with improved fresh fruit bunches (FFB) production and gain on disposal of Kulai Young land of RM364.1 million.

Revenue for the quarter rose 89% YoY to RM324.15 million due to increase in palm products prices and FFB production, the company stated in its bursa filing yesterday. 

Average crude palm oil (CPO) price for the 1Q22 was RM6,030 per metric tonne (MT) compared to RM3,751 per MT in 1Q21, or RM2,279 per MT higher (61%).

Highest monthly average CPO price of RM6,780 per MT was recorded in March 2022 which surpassed last year’s highest monthly average CPO price of RM5,159 per MT recorded in November 2021. 

Its 1Q22 palm kernel oil’s average price of RM4,655 per MT was higher by RM2,135 per MT (85%).

FFB production in the quarter stood at 195,882 per MT, 9% higher YoY, contributing a yield of 2.9 MT per ha compared to 2.7 MT per ha in the same quarter last year. 

This improvement was the effect from the company’s “Plantations Performance Improvement Programme” laid out in the group’s 2022 business plan which focuses on yield enhancement. 

Oil extraction rate (OER) and kernel extraction rate (KER) in the period increased from 20.3% to 20.6%, and from 4% to 4.1% respectively YoY.

Boustead Plantation’s Peninsular Malaysia region operations achieved a segment profit of RM75.7 million, an increase of RM49.9 million from a profit of RM25.8 million it made in 1Q21.

The higher profit was due to higher palm product prices paired with higher FFB output in the period of 80,902 MT compared to 70,938 MT in 1Q21. 

OER increased to 21.3% in the quarter from 20.9% last year whereas KER reduced from 4.1% in 1Q21 to 4% in the quarter.

The company operations in Sabah achieved a segment profit of RM71.3 million for the 1Q22 supported by FFB production of 98,822 MT compared to 87,289 MT in 1Q21.

OER of 20.5% was higher than last year of 20.4% and KER also increased to 4.2% from 3.9% last year.

Boustead Plantation’s Sarawak operation’s segment profit of RM4.3 million was an improvement compared to the RM1.8 million profit it booked in 1Q21. 

Higher palm products prices contributed to the profit despite the drop in production from 21,938 MT last year to 16,158 MT this year.

The company expects prices of palm oil to remain strong for the 2Q22 in respect of the ongoing Ukraine-Russia conflict on its impact on global edible oils market and the tightness of CPO production amid increased demand for edible oils. 

The move by Indonesia to lift its ban on export of palm oil products will add some bearishness to the palm oil prices.

Palm oil supply is expected to improve over the second half of the year due to easing labour shortages following the entry of foreign workers back to Malaysia. 

The vegetable oil market is expected to stabilise earliest in July 2022 and demand for palm oil is set to increase due to the good price spread against soyoil, as well as the switching application of sunflower oil to palm oil in relation to the conflict in Europe.

The company has proposed an interim dividend of 7.3 sen a share payable on June 24, its exchange filing yesterday stated.

Source: The Malaysian Reserve