KUALA LUMPUR: Sime Darby Plantation Bhd’s (SDP) net profit eased by 25% to RM1.86 billion in the financial year ended Dec 31, 2023 (FY23) from RM2.49 billion in FY22, mainly due to lower recurring profit before interest and tax (PBIT) and higher finance costs, partially mitigated by the higher non-recurring PBIT.
SDP said finance costs increased by 47% due to higher benchmark lending rates but were partially mitigated by 6% lower average borrowings.
It said the average interest rate stood at 5.4% per annum, as compared to 3% per annum in the previous corresponding period.
Revenue declined to RM18.43 billion against RM21.03 billion previously, it said in a filing with Bursa Malaysia today.
The group said the upstream segment reported a lower PBIT of RM1.15 billion for FY23, largely due to lower crude palm oil (CPO) and palm kernel (PK) average realised prices, which declined by 15% and 35%, respectively, and higher estate and mill operating costs, adversely affected by an increase in labour costs.
“For the fourth quarter ended Dec 31, 2023 (Q4’23), the group registered a net profit of RM200 million from the previous corresponding quarter’s RM562 million. This was due to lower recurring profits which were mitigated by profits from non-recurring activities,” it said.
The company said finance costs reduced slightly in the quarter, driven by lower borrowings, despite higher interest rates due to the increase in benchmark lending rates, with the average interest rate standing at 5.8% per annum, as compared to 4.3% per annum in the previous corresponding quarter.
“The upstream segment reported a recurring PBIT of RM198 million, a decline from the previous corresponding quarter’s profit of RM702 million.
“The major factors that contributed to the lower profits are a decline in CPO and PK average realised prices as well as lower compensation from government acquisition and rental income.
“The downstream sector reported a higher PBIT of RM183 million in the current quarter as compared to RM89 million in the previous corresponding quarter, driven by higher margins and volume demand in the European operations,” it said.
It noted that this mitigated the weaker results in the Asia-Pacific bulk and differentiated refineries due to lower margins.
As for FY24 outlook, SDP said CPO demand is expected to remain steady in the longer term, but seasonally high stockpiles in key destination countries may impact short-term demand.
Barring any unforeseen circumstances, the group remains positive as it looks ahead to another satisfactory performance in FY24.
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 the special interim dividend of 5.70 sen per share, translates into a total single-tier dividend of 15 sen per share for FY2023. – Bernama
