Sime Darby Plantation stages turnaround for fourth quarter, full year

PETALING JAYA: Sime Darby Plantation Bhd posted a net profit of RM149 million in the fourth quarter ended Dec 31, 2020 compared with a net loss of RM58 million a year ago, driven by stronger recurring profit before interest and tax (PBIT) from all operating segments and lower finance costs.

Revenue jumped 8% to RM3.64 billion from RM3.38 billion previously.

For FY2020, it recorded a turnaround in its financial performance with a net profit of RM1.19 billion compared with a net loss of RM200 million in FY2019, due to higher recurring PBIT contributed by both the upstream and the downstream segments, and higher non-recurring PBIT arising from disposal of land and divestment of subsidiaries.

Revenue jumped 8% to RM13.08 billion from RM12.06 billion.

Both the group’s upstream and downstream segments recorded better year-on-year performances. The group’s upstream segment enjoyed higher crude palm oil (CPO) and palm kernel (PK) prices, while Sime Darby Oils (SDO), representing the group’s downstream segment, benefited from its on-going business transformation programme with improved margins and lower cost of production.

Higher realised prices and stronger contribution from SDO compensated for the impact of the labour shortage in Malaysia and extreme weather (dry weather in 2019 and recent flooding due to the La Nina) on the group’s FFB production.

The group has declared a final dividend of 5.42 sen per share, which together with the interim dividend of 2.57 sen per share, amounts to a single tier dividend of 7.99 sen per share for FY2020. In addition, the group also declared a special interim dividend of 1.45 sen per share which was paid on Nov 22, 2020.

Total dividends declared in 2020 amounted to 9.44 sen per share compared with 1 sen per share in 2019.

Chairman Tan Sri Megat Najmuddin Megat Khas said the higher palm oil prices were a blessing for all industry players in what had been one of the most challenging years in recent history for the global economy.

“The positive news on the rollout of a number of vaccines globally, provides a glimmer of hope along the road to recovery. We are cognisant of the continuing devastating threat of the Covid-19 pandemic and will remain vigilant in mitigating the spread of the virus to safeguard the lives of our employees and ensure our business continuity.”

Group managing director Mohamad Helmy Othman Basha said whilst the group continues to mitigate these challenges in 2021, one of its immediate priorities is to allay the concerns of its stakeholders over the Withhold Release Order issued recently by the US Customs and Border Protection.

“We are working with independent and credible organisations to address this matter expeditiously and keeping all our stakeholders abreast on our progress. Sime Darby Plantation is determined to proactively identify any gaps that may exist in our operations and to safeguard the well-being and safety of all our employees, especially the most vulnerable among us.”

Given market forecasts of elevated CPO prices, the group is cautiously optimistic that it will achieve a satisfactory overall performance this year. The group will remain focused on its efforts to create more value for its stakeholders by continuously driving operational improvements throughout its operations and further improving the balance of profit contribution between its upstream and downstream segments in 2021.