May 31 (Bloomberg) -- Sime Darby Bhd., the world’s biggest listed palm oil producer, reported a 21 percent drop in third-quarter profit as prices of the commodity declined.
Net income was 691.2 million ringgit ($224 million), or 11.5 sen a share, in the three months ended March 31, from 876 million ringgit, or 14.58 sen, a year earlier, the Kuala Lumpur-based company said today in a statement. Revenue fell about 1 percent to 10.8 billion ringgit.
Palm oil, the world’s most-used edible oil, averaged 25 percent lower in the quarter from a year earlier amid increasing stockpiles in Malaysia and slowing consumption. Prices may advance next month as demand grows ahead of the Muslim fasting month of Ramadan in July, before resuming a decline, Dorab Mistry, a Godrej International Ltd. director who’s traded the commodity for more than 30 years, said on May 21.
“The group has undergone a challenging nine months given the lower commodity prices and economic slowdown in the markets that we operate,” Chief Executive Officer Mohd Bakke Salleh said in a separate statement. Crude palm oil prices remain “sluggish,” the company said.
Sime shares closed unchanged today at 9.42 ringgit in Kuala Lumpur trading. The stock is down 1.1 percent this year, lagging a 4.8 gain in the benchmark FTSE Bursa Malaysia KLCI Index.
Sime got an average 2,147 ringgit a ton for palm oil in the quarter, compared with 2,903 ringgit a year earlier, the company said. Profit from plantations before interest and tax dropped 27 percent to 413.2 million ringgit on lower prices.
The group’s industrial division posted a 27 percent drop in profit before tax and interest, while earnings from property advanced 15 percent and contributions from energy and utilities dropped 7 percent, Sime said.
Sime also signed an accord with China’s Weifang Municipal Port and Navigation Bureau to build terminals at the port, it said in a separate statement.
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