Higher palm product prices saw Boustead Plantations Bhd posting net profit of RM12.22mil in the first quarter ended March 31, 2021.
Announcing the stronger set of financial results on Tuesday, it expects the current high crude palm oil (CPO) prices will contribute positively to the group’s earnings this year.
Boustead Plantations said the 1Q21 net profit was in stark contrast with a net loss of RM9.55mil a year ago.
Its revenue increased by 5.68% to RM171.94mil from RM162.69mil. Earnings per share were 0.55 sen compared with loss per share of 0.43 sen.
It declared a dividend of 0.3 sen a share which will be paid on June 30, 2021 to shareholders on the register as at June 11.
“The group’s strong results were primarily attributable to higher palm product prices. Average crude palm oil (CPO) selling price increased to RM3, 751 per ton, reflecting an increase of RM958 or 34% from RM2, 793 per ton in the same quarter last year. Average palm kernel price was also higher at RM2, 520 per ton, up by RM820 or 48%,” it said in a statement.
Boustead Plantations reported fresh fruit bunches (FFB) production for the quarter was 180,165 tons while FFB yield came in at 2.6 tons per hectare. Average oil extraction rate and kernel extraction rate stood at 20.3% and 4.0% respectively.
Its chief executive officer Ibrahim Abdul Majid said: “We are pleased to maintain our positive momentum to deliver improved results for the first quarter. Moving forward, the group’s performance will continue to be driven by crop production and CPO prices.
“We are optimistic the current high CPO prices will contribute positively to the group’s earnings this year, although this may be moderated by lower production due to the existing labor shortage in the plantation industry,” he said.
Ibrahim also pointed out the recruitment of foreign workers was impacted by the border closures as a result of the pandemic, as well as Malaysia’s ongoing vaccination programmer which is being rolled out in stages.
He added this was compounded by challenges in recruiting a local workforce for plantation estates, aggravating the labor shortage in the industry.
“Nevertheless, most global commodity prices including grains and edible oils such as sunflower oil, rapeseed oil, soy oil and palm oil surged to multi-year highs in the first quarter of 2021.
“The high edible oil prices were mainly due to lower production, growing demand, tightening stocks and speculative buying by hedge funds and commodity speculators. The global shortage of vegetable oils is likely to persist in the near to medium term, as palm oil production is recovering slower than expected,” he said.
However, Ibrahim cautioned the demand for palm oil and soybean could potentially be affected by the recent resurgence of Covid-19 cases, particularly in India, as well as Asian Swine Flu in China.
He added the increased pricing pressure on oilseeds and vegetable oils is expected going into the second half of 2021 based on the prospect of large production increases in the 2021/2022 season.
“However, palm oil prices are expected to remain elevated and above average throughout 2021,” Ibrahim said.
Meanwhile, Boustead Holdings group managing director Datuk Seri Mohammed Shazalli Ramly said in order to drive sustainable growth, the group will continue to be guided by the group’s “Reinventing Boustead” strategy.
“We are looking into creating new streams of revenue by exploring new high technology and digital-based start-up ventures that will leverage on BPB’s core strengths and complement its current business operations. These are very exciting new opportunities for BPB and will help to put the company on a stronger footing to propel the group’s sustainable growth,” he said.