Boustead Plantations back to black in Q1 on firm CPO price25 May 2021
Strong CPO prices boost Boustead Plantations 1Q net profit25 May 2021
KUALA LUMPUR (May 25): Planter Boustead Plantations Bhd swung back to the black in the first quarter ended March 31, 2021 (1QFY21), posting a net profit of RM12.26 million versus a net loss of RM9.55 million a year prior.
In a bourse filing, the group also declared a dividend of 0.3 sen per share, payable on June 30. It did not declare any dividends for the corresponding quarter a year ago.
The planter’s latest quarterly revenue rose by 6% year-on-year (y-o-y) to RM171.94 million from RM162.69 million for 1QFY20.
It noted that the better earnings were due to higher commodity prices. Crude palm oil (CPO) prices during the quarter averaged RM3.751 a tonne, which was above 1QFY20’s average price of RM2,793 a tonne.
Additionally, palm kernel (PK) prices increased to RM2,520 a tonne, rising by RM820 per tonne.
That being said, fresh fruit bunch production (FFB) production was lower at 180,165 tonnes from the 209,857 tonnes achieved last year. FFB yield also declined to 2.6 tonnes per hectare from 3.1 tonnes per hectare. Its oil extraction rate (OER) declined to 20.3%, from 21%, while its kernel extraction rate (KER) shrank to 4% from 4.3%.
However, on a quarter-on-quarter (q-o-q) basis, the group saw its net profit fall by 55% to RM12.23 million from RM27.46 million, while quarterly revenue declined by 24% q-o-q to RM171.94 million from RM227.62 million, on lower FFB production.
On its prospects, the group noted that its profitability is contingent on crop production and CPO prices.
“The current high CPO prices shall contribute positively to this year’s group earnings but may be capped by lower production due to the existing labour shortage at the estates.
The current close border policy imposed by the government and the delayed vaccination programme in Malaysia will further impact the recruitment of workers from countries like Indonesia. The situation is compounded by difficulty in getting locals to work in the estates, which will aggravate the shortage in the industry,” it added.
The planter also noted that global edible oils, such as sunflower oil, rapeseed oil, soy oil and palm oil prices, reached their multi-year high in 1QFY21, following lower production and growing demand tightening stocks. It stated that the global shortage of vegetable oils is likely to worsen in the near to medium term as palm oil production is recovering slower than expected.
“However, the recent resurgence of Covid-19 cases, particularly in India, and the Asian swine flu (ASF) in China could curb demand for palm oil and soybean. Price pressure on oilseeds and vegetable oils is expected from July/September onwards based on the prospect of large production increases in 2021/2022. However, palm oil prices are likely to stay elevated and above average throughout 2021.
The group will continue to be guided by the Boustead Group’s Reinventing Boustead strategy that will put us on a stronger footing to take on new opportunities and challenges in the coming months and years,” it concluded.
Shares in Boustead Plantations settled 0.82% or half a sen higher at 61.5 sen at the noon market close, valuing it at RM1.38 billion.
Source: The Edge