Hap Seng Plantations hit by lower sales, price of CPO

PETALING JAYA: Hap Seng Plantations Holdings Bhd's net profit for the third quarter ended Sept 30, 2015 (Q3) fell 7.88% to RM21.62 million from RM23.47 million a year ago due to lower sales volume and lower average price realisation of crude palm oil (CPO).
Revenue for the quarter fell 16.69% to RM102.81 million from RM123.41 million a year ago.
Hap Seng Plantations expects the uncertainty in the palm oil market to continue in the near term as the price of palm oil is expected to be adversely affected by rising inventory, slowing demand from key importing nations and weaker prices of competing edible oils, especially soybean oil.
"However, concerns of the El Nino weather phenomenon affecting palm oil production in Malaysia and Indonesia have bolstered palm oil prices in recent months," it said.
"The group continues to put concerted efforts to improve FFB yield, CPO and PK extraction rates as well as keeping costs and inventory level low to mitigate some of the downside risks arising from the uncertainties in the palm oil market," it added.
The group is cautiously optimistic of achieving satisfactory results for the financial year ending Dec 31, 2015 under current market conditions.
In a filing with Bursa Malaysia yesterday, the group said the quarter's performance was affected by lower sales volume and lower average CPO price realised but it was mitigated somewhat by lower production costs due to lower manuring cost.
"CPO sales volume at 41,507 tonnes was 14% below the preceding year corresponding quarter whilst palm kernel (PK) sales volume was 3% higher at 9,239 tonnes. Lower CPO sales volume was affected by lower CPO production attributable to lower fresh fruit bunches (FFB) production mitigated by better oil extraction rate, lower volume of external FFB purchased and higher closing inventory due to timing of deliveries.
"Despite lower PK production, PK sales volume was higher due to favourable movement in inventory levels," it said.
The average selling price realisations of CPO and PK for Q3 were RM2,086 and RM1,379 per tonne respectively, compared with RM2,215 and RM1,412 per tonne respectively a year ago.
For the nine months ended Sept 30, 2015, net profit dropped 35.70% to RM59.40 million from RM92.39 million a year ago while revenue fell 14.69% to RM314.67 million from RM368.84 million a year ago.
The group attributed the drop in performance to lower average selling prices and lower sales volume of CPO and PK.