Continuous improvements in operational efficiencies and steady earnings from Sime Darby Oils mitigated the adverse impact from weak CPO and PK prices

Kuala Lumpur, 30 August 2019 – For the six months ended 30 June 2019, Sime Darby Plantation (SD Plantation) Group reported net earnings of RM101 million, representing a 64 percent decrease against the corresponding period of the previous year. Improvements from a 4 percent year-on-year (YoY) rise in fresh fruit bunch (FFB) production, increase in oil extraction rate (OER) at 21.34 percent, as well as higher earnings from its recently rebranded Downstream segment, Sime Darby Oils (SDO), were not sufficient to mitigate the adverse impact of weaker crude palm oil (CPO) and palm kernel (PK) prices realised, which declined by 16 percent YoY from RM2,414 per MT to RM2,016 per MT and by 41 percent YoY from RM1,897 per MT to RM1,116 per MT respectively.

For the second quarter of its financial year ending 31 December 2019 (Q2 FY2019), the Group reported net earnings of RM27 million against net earnings of RM30 million in the corresponding quarter of the previous year. The current quarter continued to be adversely affected by weak CPO and PK prices, but partially cushioned by lower finance costs with the capitalisation of higher borrowing costs and lower net tax resulting from the recognition of deferred tax assets on losses suffered by some subsidiary companies. The average CPO price realised declined by 15 percent YoY from RM2,379 per MT to RM2,021 per MT whilst the average PK price realised was lower by 39 percent YoY from RM1,682 per MT to RM1,020 per MT.

The Group’s FFB production of 2.43 million MT in Q2 FY2019 was comparable to the same quarter of 2018 of 2.44 million MT. It also recorded an improvement in OER from 21.11 percent to 21.27 percent. Nevertheless, the Group’s earnings continued to be negatively impacted by weaker CPO and PK realised prices.

Read the full Press Release HERE

Kuala Lumpur, 15 September 2019 - We refer to the report by Mightyearth.org which alleged an occurrence of deforestation within Sime Darby Plantation’s (SDP) boundary at Derawan Estate in Bintulu, Sarawak between 19 February 2019 to 23 August 2019.

Pursuant to the report, our desktop verification on the coordinates (3.353, 113.39) showed that it falls outside of SDP’s operational area; approximately 100 meters away from our Rajawali Estate boundary. This was followed by an on- site verification which further confirmed that the deforested area mentioned in the report directed to a neighboring third party local agricultural company.

With this, we would like to clarify that this allegation is inaccurate and the investigation report has been submitted to Mighty Earth.

We would like to reiterate that as the world’s largest producer of certified sustainable palm oil, SDP strictly adheres to the No Deforestation, No Peat and No Exploitation (NDPE) commitment as reflected in our Responsible Agriculture Charter and Human Rights Charter. SDP remains committed to our pledge to conduct business and operations responsibly by adhering to strict sustainability standards and best practices. For more information, please visit our website www.simedarbyplantation.com

World’s largest palm oil producers and buyers, including Bunge, Cargill, Golden Agri-Resources (GAR), Mondelēz International, Musim Mas, Nestlé, Pepsico, Sime Darby Plantation, Unilever and Wilmar to fund and develop radar-based forest monitoring system

Washington, DC (October 31, 2019)–A coalition of ten major palm oil producers and buyers are collaborating to support and fund the development of a new, publicly available radar-based forest monitoring system known as Radar Alerts for Detecting Deforestation (RADD). This partnership between Bunge, Cargill, Golden Agri-Resources (GAR), Mondelēz International, Musim Mas, Nestlé, Pepsico, Sime Darby Plantation, Unilever and Wilmar will make it much easier for companies and other stakeholders to see deforestation happening in near-real-time and with greater accuracy. With this information, they can more quickly mobilize follow-up actions on the ground and work to improve the sustainability of commodity supply chains.

The RADD system is currently being developed for Indonesia and Malaysia. Preliminary results for Indonesia and Malaysia indicate that the new RADD system can detect tropical deforestation several weeks earlier than optical-based systems.

Developed by Wageningen University and Satelligence, and facilitated by World Resources Institute, the RADD system will augment existing publicly available monitoring tools that rely on optical-based satellite imagery, which can be delayed when clouds obstruct the view of forests. Through the use of radar waves, the new system can penetrate cloud cover and gather forest change information without being affected by clouds or sunlight.

What makes RADD unique is that it is the first radar-based monitoring system of this scale that will make deforestation alerts publicly available. Once the system is complete, the alerts will be available on Global Forest Watch and Global Forest Watch Pro, and the methodology behind the alerts will be published.

The new system will utilize freely available radar data from the European Space Agency’s Sentinel-1A and B satellites, which orbit the earth every six to 12 days. These satellites provide high spatial detail that will also improve detection of smaller clearing events.

Throughout the RADD system development over the next two years, partner companies will receive alerts about detected deforestation events and will provide crucial feedback to improve the system. The open nature of the system will enable companies - plus governments, civil society organizations and concerned stakeholders - to monitor forests using the same information source and standards.

QUOTES

Bunge:
“Bunge has long believed in the power of technology to help create a more sustainable future. That’s why we’re proud and excited to see our long-term partnership with Satelligence extended to Global Forest Watch to improve transparency and enable a more sustainable supply chain.”

• Robert Coviello, Senior Vice President, Sustainability & Government Affairs, Bunge

Cargill: “Cargill is committed to working with industry partners to spur innovation and drive meaningful change to end deforestation. We are delighted about RADD’s introduction to the palm oil sector and look forward to developing credible, real-time data that is publicly accessible to enhance our ability to act on deforestation alerts.”

• John Hartmann, Agriculture Supply Chain Sustainability Lead, Cargill

Golden Agri Resources: “GAR has always believed in harnessing technology to spur excellence in agri-business. This pioneering initiative will support and boost our efforts in working towards full traceability to the plantation, as we will now be able to see the real-time picture from above while working with our suppliers on the ground towards responsible palm oil.”

• Dr Gotz Martin, Head of Sustainability Implementation, Golden Agri-Resources Ltd

Mondelēz International: “Technology is fast-evolving to enable sector-wide, near real-time monitoring of the palm sector. Sustainable palm oil production benefits everyone and tools like this bring it within reach.”

• Jonathan Horrell, Director Global Sustainability, Mondelēz International

Musim Mas: “RADD is a welcome addition to our supply chain monitoring "toolbox." Its technology will enable early and precise identification of deforestation. The open nature of RADD allows companies, governments and the public to access accurate, timely information. We welcome the new level of transparency RADD brings to the oil palm sector.”

• Olivier Tichit, Musim Mas Director of Sustainable Supply Chain, Musim Mas

Nestle: “We take an integrated approach in addressing the risks of deforestation, combining tools like certification, supply chain mapping, on-the-ground verification and satellite monitoring. We are pleased to support the development of publicly available forest monitoring system like RADD as it will bring accountability and transparency across the industry.”

• Benjamin Ware, Global Head of Responsible Sourcing, Nestlé

Satelligence: “We are very pleased to work together to pinpoint the highest risk areas and focus engagement and mitigation where it is needed most. RADD will enable companies to focus better on what really matters: making deforestation-free sourcing decisions.”

• Niels Wielaard, Director, Satelligence

Sime Darby Plantation: “People around the world are concerned about the rapid rate of deforestation and regrettably the oil palm industry is often associated with it. As producers of sustainable palm oil, Sime Darby Plantation understands this concern and believes that traceability in our supply chain is necessary to draw the line on deforestation. While we have developed our own traceability tool called Crosscheck, we know we cannot do it alone because change requires an industry-wide effort. We believe that working together with like-minded partners on the development of RADD will ensure we move towards a sustainable future for our world and the industry.”

• Dr. Simon Lord, Chief Sustainability Officer, Sime Darby Plantation

Unilever: “We are committed to developing a range of technologies that will enhance and accelerate our efforts to address potential issues within our supply chain. Better radar monitoring is an essential piece of this puzzle. We always aim to be the first to know and the first to act, so we are pleased to be supporting advanced tools that will make risks known to us even sooner.”

• Petra Meekers, Head of Sustainable Sourcing, Unilever

Wageningen University: “I am very excited to be part of this unique project, and with this to support transparent forest management. Advancing our radar and machine-learning methods to build an operational monitoring system that detects deforestation more quickly and accurately is a great challenge. Providing radar-based deforestation alerts as a public good will help to further increase transparency of unsustainable and illegal activities in tropical forests.”

• Johannes Reiche, Assistant Professor Radar Remote Sensing, Wageningen University

Wilmar: "Monitoring over 14.75 million ha of supplier's concessions is challenging and resource-intensive. We look forward to the new RADD system helping us detect deforestation activities with accuracy and speed. This will in turn strengthen monitoring methods and responses to take us another step towards a deforestation-free supply chain. Such a collective undertaking by industry players is crucial and will achieve far better outcomes in translating monitoring results to action.”

• Perpetua George, General Manager – Sustainability, Wilmar

World Resources Institute: “We’re thrilled to see a major group of companies coming together in this way to create a collective change. Uniting around this shared, cutting-edge monitoring system will allow for more efficient use of resources, create more streamlined conditions for companies to follow up and ultimately help prevent further deforestation.”

• Anne Rosenbarger, Commodities Manager, World Resources Institute

(i) PT Mitral Austral Sejahtera (PT MAS)

Please be informed that as at 25 June 2019, PT MAS has ceased to be a subsidiary of SDP as we have effectively disposed our interest in the company to PT Inti Nusa Sejahtera. We kindly request the amendment of ‘Table 4: Oil Palm Concessions Sealed by KLHK August to October 2019’ as attached in your letter to reflect this.

(ii) PT Sime Indo Agro (PT SIA)

Please refer to our previous statement on PT SIA at the following link: https://www.sdguthrie.com/media/press-releases/statement-pt-sime-indo-agro-pt-sia

We can confirm that an area occupied by the local communities where fire has occurred, which is outside of the operational area of PT SIA, has been sealed by the Ministry of Environment and Forestry to prohibit further activity pending completion of investigation.

(iii) Hotspot Data

Hotspot monitoring of our global concession areas via satellite data is a well-established practice in SDP. Utilising data from MODIS, VIIRS and NOAA, we monitor hotspot occurrence up to 5km outside the boundary of our concession areas in Indonesia before conducting further desktop validation and on-site investigation. We believe it is not only important to determine whether or not fire incidents actually occur within or outside of our concession areas, but to also investigate the cause of the fire incidents.

SDP’s hotspot data, together with our report on the number of actual fire incidents that occur within or outside of our global concession areas and the cause of these fire incidents based on our investigation, can viewed by the public using SDP’s Hotspots Dashboard available at our website – www.simedarbyplantation.com.

We welcome Greenpeace to peruse the data presented in our Hotspots Dashboard. We also look forward to understand the basis and evidence upon which Greenpeace produces the hotspot data that will be presented in its upcoming report.

Kuala Lumpur, 29 November 2019 - Sime Darby Plantation's (SDP) continuing journey to produce palm oil in a responsible and sustainable manner was recognised by two different organisations for the second consecutive year.

At the Sustainable Business Awards (SBA) Malaysia 2019 ceremony organised by Global Initiatives on 26 November, SDP was accorded three awards: the Best Supply Chain Management, the Best Land & Biodiversity, as well as a Special Recognition in the United Nation's Sustainable Development Goals category. This was followed by another triumphant run just two days later on 28 November at the Europa Awards for Sustainability 2019 where SDP took home the award for Best Innovation in Sustainability. The Europa Awards for Sustainability was organised by EU-Malaysia Chamber of Commerce and Industry

SDP's Chief Sustainability Officer Dr Simon Lord said the accolades affirm the Company’s conviction that its sustainability journey is on the right path.

"As the world's largest producer of Certified Sustainable Palm Oil, we ensure that responsible and sustainable practices are ingrained in our day-to-day operations. We aim to achieve the right balance in our approach to making a positive impact towards people, planet and prosperity, while at the same time meeting the expectations of our various stakeholders. We are truly humbled by these recognitions. More than anything, they serve to motivate us to continue delivering our commitments and improve the sustainability efforts we have in place," he added.

In 2018, SDP walked away with five (5) SBA awards including the coveted Overall Winner category. At the Europa Awards for Sustainability last year, SDP took home the Best Sustainable Palm Oil Leader award, beating several other leading industry players.

Kuala Lumpur, 29 November 2019 – For the nine months ended 30 September 2019, Sime Darby Plantation (SD Plantation) Group reported a net profit of RM167 million from its continuing operations against net profit of RM556 million in the corresponding period of the previous year. The Group’s PBIT from its continuing operations in the current period of RM333 million was lower on the back of weaker crude palm oil (CPO) and palm kernel (PK) prices but was partially cushioned by better earnings from its Sime Darby Oils (Downstream) operations. In the same period, discontinuing operations which comprises of the Liberian operations and joint ventures in oleochemical and biomass, recorded a net loss of RM309 million mainly due to the impairment of assets in Liberia of RM256 million. As a result, the Group posted a net loss of RM142 million in the nine-month period compared to a net profit of RM393 million in the corresponding period of the previous year.

For the third quarter of its financial year ending 31 December 2019 (Q3 FY2019), the Group posted a net loss of RM243 million against a net profit of RM115 million in the corresponding quarter of the previous year largely due to a net loss registered by its discontinuing operations of RM275 million, arising mainly from the impairment of assets in Liberia. From its continuing operations, the Group reported a net profit of RM32 million in comparison with a net profit of RM126 million in the same quarter last year. The decline in profit was due to weaker average CPO and PK prices realised which was further exacerbated by lower FFB production in the quarter under review. This was partially cushioned by stronger performance and contribution from Sime Darby Oils (Downstream) operations, lower finance costs and lower tax expense.

“SD Plantation’s performance was adversely impacted by volatile commodity prices and unpredictable weather. The results were also largely affected by the impairment charges for our assets in Liberia as we prepare to exit our business there. Our operations in Liberia continue to face challenges and uncertainties. It continues to report losses to-date since its commencement. Despite these difficulties, I believe the Group will be more resilient as we put performance improvement measures in place to overcome the challenges and strive for greater profitability and productivity targets,” said Mohamad Helmy Othman Basha, SD Plantation’s Group Managing Director.

“Far from being discouraged, the Group is now even more determined in pursuing our latest strategies to thrive in the prevalent challenging business environment. This includes balancing the profit contribution from both our Upstream and Downstream segments, strengthening our approach to improve operational efficiencies as well as maintaining disciplined management of our cost and liquidity,” added Mohamad Helmy.
“Given the Group’s committed forward sales, the recent improvements in CPO and PK prices will have minimal impact on the Group’s results for the financial year ending 31 December 2019 (FY2019). Nevertheless, should the prices continue to rally, the Group’s prospects will improve in the next financial year. By then, SD Plantation’s legacy issues impacting the Group’s current results are also expected to be fully resolved,” stated Mohamad Helmy.

Third Quarter Ended 30 September 2019 versus Quarter Ended 30 September 2018 (YoY Comparison) From its continuing operations, the Group recorded a PBIT of RM118 million in Q3 FY2019 against a PBIT of RM270 million in the corresponding period of the previous year. The PBIT for the current quarter included non-recurring losses of RM44 million, comprising the impairments of a non-operating asset in Indonesia and a loan due from a joint venture in China.

Upstream Operations

In Q3 FY2019, Upstream operations posted a PBIT of RM76 million compared to RM218 million in the corresponding quarter of the previous year. The weaker performance was attributable to lower CPO and PK realised prices, lower FFB production and lower profit from the sugar operations in Papua New Guinea (PNG) which was inflicted by a pest attack. Average CPO prices realised was lower by 6 percent YoY from RM2,119 per MT to RM1,990 per MT while average PK price realised was lower by 37 percent YoY from RM1,661 per MT to RM1,040 per MT. The Group’s FFB production achieved in the current quarter of 2.44 million MT was 11 percent YoY lower compared to 2.73 million MT achieved in the same quarter last year. The adverse impact from the above was partially compensated by an improvement in oil extraction rate (OER) from 21.07 percent to 21.85 percent.

Upstream Malaysia registered a PBIT of RM88 million versus RM125 million in the corresponding quarter of the previous year. The weaker performance was mainly due to the lower average CPO and PK prices realised which declined by 9 percent YoY to RM2,028 per MT, and by 35 percent YoY to RM1,144 per MT, respectively. FFB production in this quarter was marginally lower at 1.28 million MT against 1.29 million MT in the same quarter last year, primarily attributable to prolonged dry weather which caused delays in the ripening of fruits. On the other hand, OER increased from 20.66 percent to 21.59 percent as the dry weather was conducive for harvesting and crop evacuation.

Upstream Indonesia reported a PBIT of RM90 million in comparison with RM63 million in the corresponding quarter of the previous year. Earnings were driven primarily by higher CPO sales volume and OER which improved by 1.15 percentage points to 22.19 percent in the quarter under review compared to 21.04 percent in the same quarter last year. However, earnings were adversely impacted by lower PK prices which declined by 35 percent YoY to RM874 per MT and lower FFB production at 0.74 million MT, a drop of 19 percent YoY, largely due to dry weather conditions in the South Kalimantan region.

Upstream PNG and Solomon Islands (SI) recorded a loss before interest and tax (LBIT) of RM102 million in the quarter under review against a PBIT of RM30 million in the corresponding quarter of the previous year. The decline was primarily due to weaker CPO price realised which declined by 13 percent YoY and was further exacerbated by lower profit from the sugar operations which suffered a 30 percent YoY decline in cane production. The average CPO price realised declined from RM2,289 per MT to RM1,985 per MT this quarter. FFB production for the quarter was also lower by 18 percent YoY at 0.42 million MT, impacted by heavy rainfall which interrupted bunch pollination. The unfavourable weather conditions had also delayed harvesting which caused OER to decline from 22.11 percent to 22.01 percent.

Downstream Operations

Sime Darby Oils (Downstream) continued to register strong growth and posted a higher PBIT of RM68 million as compared to RM48 million in the corresponding quarter of the previous year, representing an increase of 42 percent YoY attributable to better earnings from differentiated businesses and trading operations. The improved performance of differentiated businesses was largely due to higher sales volumes and better margins in Asia Pacific, compensating for weaker contribution from differentiated businesses in Africa which faced stiff competition. The trading operations posted better results attributable to higher margins arising from the zero export duty for both Malaysia and Indonesia in Q3 FY2019.

Other Operations

Other operations registered a PBIT of RM18 million in the current quarter compared to RM4 million in the corresponding quarter of the previous year due to better results from joint ventures and associates in the current quarter.

Kuala Lumpur, 6 December 2019 - Sime Darby Plantation Berhad (SDP) would like to confirm that an outright divestment of SDP’s 100% equity stake in Sime Darby Plantation Liberia Inc. (SDPL) to Mano Palm Oil Industries (MPOI) has been approved by the SDP’s Board of Directors. This decision is part of SDP’s current asset monetisation exercise, which includes the divestment of underperforming assets or assets that have achieved its full value potential for disposal.

SDP would also like to confirm that the Government of Liberia has consented to the divestment of SDPL’s shares to MPOI.

SDP is currently working together with MPOI in finalising the terms and conditions of this divestment exercise via a Sale & Purchase Agreement which is targeted to be signed by the end of 2019, and the transaction is expected to be completed in the first quarter of 2020. Any further details and updates on this divestment exercise will be announced in due course.

On 30 January, Sime Darby Plantation Berhad (SDP, Baa1 negative) announced that it had refinanced around MYR3.9 billion of credit facilities in December 2019, or around 49% of its total reported debt.

The large debt refinancing is credit positive for SDP as it will improve its liquidity and extend its debt maturities.

In total, SDP refinanced its $760 million (MYR3.1 billion) foreign currency loans, which previously had a bullet maturity in June 2020, with new amortizing term loans. It also refinanced MYR800 million working capital facilitates with new term loans, which have longer maturities. SDP announced that the new facilities offer slightly lower interest rates than its previous facilities, though specific details were not disclosed.

Pro forma for the refinancing, we estimate SDP's short term debt as a proportion of total debt declined to around 28% from 77% as of 30 September 2019.

Click here to read the full release.

The Group reports a net loss of RM200 million for 2019 but expects the recovery in palm product prices to contribute positively to its 2020 performance _________________________________________________________________________

Kuala Lumpur, 28 February 2020 – For the financial year ended 31 December 2019, Sime Darby Plantation (SD Plantation) Group reported an unaudited net profit of RM122 million from its continuing operations compared to RM729 million in the corresponding period of the previous year. The weaker performance was attributable to lower crude palm oil (CPO) and palm kernel (PK) prices realised, as well as lower fresh fruit bunch (FFB) production in the year under review. This was partially offset by lower non-recurring losses, finance costs and a tax credit registered for the financial year. The Group’s discontinuing operations, which comprise its Liberian operations and joint ventures in the oleochemical and biomass businesses, recorded a net loss of RM322 million mainly arising from the impairment of assets in Liberia. Accordingly, the Group posted a net loss of RM200 million for the full year compared to a net profit of RM523 million in the previous year.

For the fourth quarter of the financial year ended 31 December 2019 (Q4 FY2019), the Group’s continuing operations reported a net loss of RM45 million against a net profit of RM172 million in the same quarter last year. The decline in profit was largely due to lower FFB production and lower contribution from Sime Darby Oils (Downstream) operations in the quarter under review. This was partially cushioned by higher CPO prices realised, lower finance costs and lower tax expense in Q4 FY2019. With the Group’s discontinuing operations recording a net loss of RM13 million, the Group’s net loss totalled RM58 million in this quarter against a net profit of RM129 million in the corresponding quarter of the previous year.

“The financial year 2019 proved to be challenging for the plantation industry and Sime Darby Plantation as we continued to face unfavourable weather conditions and the low CPO and PK prices for the most part of the year. However, we are progressing into the new year 2020 with renewed enthusiasm. CPO prices have rebounded towards the end of 2019 and this may offer some respite to the industry players if the price recovery is sustained,” said Tan Sri Dato' A. Ghani Othman, SD Plantation’s Chairman.

“We are cognisant that factors beyond our control, such as the recent outbreak of the Covid-19 in China, may have negative implications on global economic growth and demand for palm oil. The impact from restrictions placed by India on imports of refined palm oil will also be negative to the industry. Nevertheless, this will not affect our focus and Page 2 of 4 determination to improve our financial performance as we continue to rely on the Group’s resilience,” he added.

In January 2020, SD Plantation divested its entire equity interest in Sime Darby Plantation (Liberia) Inc. to Mano Palm Oil Industries Limited (MPOI). The decision to exit was made in view of various operating challenges the Group had faced since its foray into the West African country in 2009. The Group believes the divestment, whilst stemming future losses from its operations in Liberia, will enable SD Plantation to reallocate financial resources to generate higher value for its shareholders.

SD Plantation’s Group Managing Director, Mohamad Helmy Othman Basha further reiterated that the disposal of the Group’s Liberia operations ended a legacy issue that has hampered the Group’s financial performance. In his first year as SD Plantation’s Group Managing Director, Helmy is confident that the Group remains on track in its strategies of increasing profit contribution from its Downstream segment, improving operational efficiencies in its Upstream operations as well as in maintaining disciplined management of cost and liquidity.

“The Group continues to place priority in its deleveraging efforts and completed the refinancing of its credit facilities worth approximately RM3.9 billion on marginally improved terms in December 2019. The refinancing exercise was rated as credit positive by Moody's Investors Service.

“This refinancing exercise has not only resulted in a lower cost of debt for us, but it has also strengthened our balance sheet and provided financial flexibility to manage our operations and finances. With this plan set in motion, we are one step closer to realising our aspirations to reduce the Group’s gross gearing ratio from 49 percent as at 31 December 2019 to approximately 30 percent within the next three years,” added Helmy.

Outlook

The expectation of a slowdown in crop production in Malaysia and Indonesia in 2020 has resulted in the price recovery of palm products. However, the rise in prices is expected to be moderated over concerns on the global economic growth with the outbreak of the Covid-19. Moreover, restrictions placed by India on imports of refined palm oil may have an impact on these prices. Despite these uncertainties, other factors such as biodiesel mandates in Malaysia and Indonesia are expected to keep palm product prices resilient in the near term.

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APPENDIX 1

Fourth Quarter Ended 31 December 2019 versus Quarter Ended 31 December 2018 (Year-on-year (YoY) Comparison)

The Group’s continuing operations reported a profit before interest and tax (PBIT) of RM73 million in Q4 FY2019 against RM343 million in the corresponding period of the previous year. The PBIT for the current quarter included non-recurring profit of RM11 million from the disposal of land in Malaysia and Thailand.

Upstream Operations

In Q4 FY2019, Upstream operations registered a loss before interest and tax (LBIT) of RM10 million compared to a PBIT of RM208 million in the corresponding quarter of the previous year. The weaker performance was largely attributable to lower FFB production and weaker average PK price realised. The Group’s continuing operations reported FFB production of 2.23 million MT in the current quarter compared to 2.78 million MT in the same quarter last year. Average PK price declined by 12 percent YoY from RM1,348 per MT to RM1,186 per MT. The adverse impact from the above was partially compensated by the 20 percent YoY improvement in average CPO price realised from RM1,871 per MT to RM2,240 per MT, and the improved oil extraction rate (OER) from 21.27 percent to 21.83 percent.

Upstream Malaysia reported a LBIT of RM67 million in the quarter under review versus a PBIT RM176 million in the corresponding quarter of the previous year. The weaker performance was mainly due to lower FFB production which declined from 1.51 million MT to 1.12 million MT amid prolonged dry weather in Peninsular Malaysia in 2019 which impacted the development of oil palm inflorescence. Its earnings were also affected by lower average PK price realised which declined by 8 percent YoY to RM1,321 per MT, as well as the unrealised losses of RM140 million arising from fair value of commodity hedges on the back of the sharp increase in market prices in November and December 2019. Nevertheless, average CPO price realised was 15 percent higher YoY at RM2,229 per MT this quarter compared to RM1,939 per MT in the same quarter last year. OER also improved from 20.68 percent to 21.05 percent as a result of dry weather conditions being more conducive for harvesting and crop evacuation.

Upstream Indonesia posted a PBIT of RM99 million in Q4 FY2019 compared to RM5 million in the corresponding quarter of the previous year. The improvement in this quarter was mainly driven by average CPO price realised which increased by 37 percent YoY to RM2,274 per MT and OER which increased by one percentage point to 22.24 percent arising from better crop quality delivered to mills. However, FFB production was lower in the quarter under review at 0.73 million MT against 0.79 million MT in the same quarter last year, due to a prolonged severe rainfall deficit in parts of Kalimantan and Sumatera which interrupted bunch formation.

Upstream PNG and Solomon Islands (SI) reported a LBIT of RM42 million in the quarter under review against a PBIT of RM27 million in the corresponding quarter of the previous year. The decline was primarily due to lower FFB production and was further exacerbated by lower fair value of biological assets arising from the expectation of lower cane production in the coming season as it is still recovering from the severe pest issue. FFB production for the quarter was lower by 21 percent YoY at 0.38 million MT, impacted by higher seasonal rainfall particularly in West New Britain which affected bunch pollination. On the other hand, the average CPO price realised and OER improved to RM2,190 per MT and 23.15 percent, respectively in the quarter under review.

Downstream Operations

Sime Darby Oils registered a lower PBIT in Q4 FY2019 of RM72 million as compared to RM98 million in the corresponding quarter of the previous year. Although there was an increase in sales volumes, the decline in earnings was attributable to unrealised losses arising from fair value of commodity contracts as at 31 December 2019 and weaker contribution from certain differentiated businesses.

Kuala Lumpur, 10 April 2020 - Sime Darby Plantation Berhad (SDP) would like to thank the Sabah state government on its latest decision to allow oil palm estates and mills in Tawau, Lahad Datu, Kinabatangan, Semporna, Kunak and Kalabakan to resume operations. We welcome this carefully measured decision which balances the need to control the spread of the COVID-19 virus whilst allowing an industry deemed essential by the National Security Council (NSC) to continue being productive.

SDP would like to reiterate our commitment to continue working with the authorities to ensure that we are in strict compliance to the operating conditions and guidelines of the State health department. This has been our commitment for all our operations throughout the country since the commencement of the Movement Control Order (MCO), and we will continue to fulfil this commitment to mitigate any risks to the safety and health of our workers.