KUALA LUMPUR: Sime Darby Plantation Bhd sees its net profit triple to RM1.21 billion in the third quarter (Q3) and expects to close its year ending Dec 31 2023 on a more robust footing.
SD Plantation also delared that the labour shortage crisis was now behind it.
The group said the higher profit than the RM396 million in the corresponding Q3 of 2022 was buoyed by the turnaround of its uptream Malaysia operations.
Its upstream business improved in Q3 led by the strong recovery of the Malaysian operations, which saw a 38 per cent year-on-year (YoY) increase in fresh fruit bunch (FFB) production, due to having more harvesters and intensive rehabilitation efforts.
The Malaysian production volume achieved in Q3 2023 was higher by 43 per cent quarter-on-quarter (QoQ) and also represented 43 per cent of the total Malaysian production for the cumulative nine months of the year.
Quarterly revenue, however, declined 11.46 per cent to RM4.77 billion from RM5.39 billion a year ago.
For the nine-month period, SD Plantation's net profit slipped to RM1.66 billion versus RM1.93 billion in the same period last year. Revenue was down to RM13.15 billion from RM15.36 billion previously.
Chairman Tan Sri Dr Nik Norzrul Thani Nik Hassan Thani said SD Plantation was able to get back on track despite a challenging start for the year.
"I am also thrilled with the strategic partnerships that the group has established recently in China and India, two of our major export countries.
"We are looking forward to unlocking more value with these collaborations as ongoing improvement efforts will ensure that we are able to close the second half of the year on a much stronger footing," he said in a statement today.
Group managing director Datuk Mohamad Helmy Othman Basha said it is seeing the results of months of rehabilitation work with an increased workforce successfully turning around its local upstream operations in Q3.
"We expect to achieve the full complement of harvesters for Sabah and Sarawak by the end of the year, and by mid-2024, these harvesters will acquire sufficient skills to be more productive. We will also continue to localise our workforce as we are no longer recruiting new foreign workers for non-harvesting work.
"While the rehabilitation work continues and is expected to be completed by mid-2024, I'm pleased to report that our labour shortage crisis is now behind us," he added.
SD Plantation expects commodity prices to remain volatile in the near term due to persistent geopolitical concerns and global macroeconomic uncertainties.
Although El Niño has not yet caused widespread dryness in Southeast Asia, on a global level, it has contributed to supply concerns as vegetable oil production may be impacted in 2024.
"The group is optimistic of achieving higher FFB production for the full year, largely driven by improvements in labour productivity and field conditions in its Malaysian operations.
"The group also continues to explore further growth in new and existing markets, particularly via its downstream arm, Sime Darby Oils. While challenges persist, the group is expected to perform satisfactorily in FY2023."