Sime Darby Says Quarterly Profit Drops 21% on Lower Palm Prices
Sime Darby Bhd. (SIME), 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 rose 0.5 percent to 9.47 ringgit as of the 12:30 p.m. trading break in Kuala Lumpur before the earnings announcement. The stock is down 0.5 percent this year, lagging a 5.2 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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