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Agriculture Asia

Accelerating production cheers palm producers after painful first half

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Southeast Asian palm producers are continuing to suffer the financial after effects of El Nino in lost production and sales revenue, amid strong signs that physical production recovery is rapidly regaining lost pace, La Nina permitting. Sime Darby saw its plantation division profits cut by 18.5% in the second quarter as its fresh fruit bunch (FFB) production fell by 11.5% in Malaysian and 10% in Indonesia. Malaysia’s TH Plantations saw its second quarter FFB output bounce back 29% in Q2 QoQ, with FFB production in the three months to July nudging slightly above the year ago level following strong YoY rises in June and July. The firm still expects to make only a gradual return to full production health during an otherwise subdued calendar year.

Sustainability meanwhile emerged as a significant contributor to IOI’s collapse to a MYR58.5mn Q2 loss in its resource-based manufacturing segment compared to a MYR99.1mn profit in the year-ago period. While IOI marked the bulk of the red ink down to losses on forward foreign exchange hedges, the firm’s widely publicised suspension from the RSPO sustainability scheme and resulting contract cancellations contributed to a 15% YoY decline in like for like oleochemicals margins.

MS – 26/08/2016

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