KUALA LUMPUR, May 20 (Reuters) - Malaysia’s Sime Darby Plantation on Thursday reported a higher first-quarter net profit due to improved production of palm fruit bunches and better palm oil prices, although it expects prices to ease in the second half of 2021.
The company’s net profit rose to 562 million ringgit ($135.78 million) for the Jan-March period from 468 million ringgit a year ago, while revenue climbed 21% to 3.67 billion ringgit.
Malaysia’s benchmark crude palm oil price scaled to a record high this month due to tightening global edible oil supplies and traded at 4,266 ringgit ($1,030.68) a tonne by Thursday afternoon.
“We saw an improvement in the results of Sime Darby Oils in the Asia Pacific, which benefited from the market price uptrend,” Group Managing Director Mohamad Helmy Othman Basha said in an exchange filing, adding that demand is yet to fully recover from the COVID-19 pandemic’s impact.
Sime Darby also said crude palm oil price in the first quarter was driven primarily by record high prices of substitute oils and is expected to soften in the second half of 2021 as production increases.
The world’s largest palm planter added that output is expected to improve this year as it continues efforts to increase productivity through automation and mechanisation.
“With this strong showing in the first quarter, we are on-track to achieve our financial targets for the rest of 2021,” said Chairman Megat Najmuddin Megat Khas.
Meanwhile, the company has said a third-party assessor’s review of its operations, as part of efforts to address the United States import ban, is expected to be completed in June.
The U.S. Customs and Border Protection in December banned palm imports from Sime Darby over accusations of forced labour, prompting some global palm oil buyers to drop it from supply chains.
$1 = 4.1390 ringgit Reporting by Mei Mei Chu; editing by Uttaresh.V