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Asia Palm Oil

Sime Darby & FGV boast soaring Q1 profits due to stronger palm oil prices

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Sime Darby profits climbed higher through the first three months of the 2016/17 financial year (July 16 – June 17), driven by improved productivity and stronger crude palm oil (CPO) prices, the firm reported in their third quarter financial results (Jan – Mar 17). According to the company, CPO selling prices were seen on average 40% higher than year ago levels through Q3 at RM3,088/t (720USD/t). Fresh fruit bunch (FFB) output was up 20% and 7% YoY in Malaysia and Indonesia respectively, although the oil extraction rate (OER) fell slightly YoY due to young areas coming into maturity and heavy rainfall compared to a year ago.

Meanwhile, Felda Global Ventures Holdings Berhad (FGV) also reported a huge increase in profits through Q1 2017, largely due to a huge 16% YoY increase in CPO production to 566,000t. Like Sime Darby, FGV reported higher revenue in their plantation sector due to higher average CPO prices of RM3,061/t (714USD/t) compared to RM2,303/t (537USD/t) during the same period last year. FFB production was up 2.6% YoY, while wet weather conditions saw OER fall slightly YoY.

FGV expect CPO prices to decline over the summer months due to the recovery in Malaysian palm oil output, although Malaysian palm oil production is still expected to remain lower than 2015 levels this year due to labour shortages.

NB 31/5/2017

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