Kuala Lumpur, 9 February 2018 – Sime Darby Plantation Berhad (SD Plantation) launched its ’Operational Excellence and Innovation Business Management Strategy 2.0’ (OEIBMS 2.0) to further drive continuous improvement in operational excellence and productivity within its business operations.

The OEIBMS 2.0 is a follow-up to the success of the Lean Six Sigma (LSS) Business Management Strategy launched in 2013 by the now de-merged Sime Darby Group to achieve operational excellence benefits in terms of cost-savings, cost avoidance and improved revenue generation derived from implementing various LSS projects across the Company. With the new strategy, SD Plantation aims to further deliver RM550 million in cumulative benefits by the end of FY 2022, approximately 57% more than the RM351 million the Company achieved over a 5-year period as a Division within the Sime Darby Group.

“In FY2013, the Sime Darby Group embarked on a five-year Business Management Strategy that was to serve as a roadmap towards achieving RM775 million in LLS benefits across the Group. At the end of its 5-year implementation period in financial year 2017, the Group achieved the cumulative benefits of RM967 million, exceeding its initial target set at RM775 million. A total of RM351 million of these benefits were derived from SD Plantation, exceeding our own cumulative target of RM245 million by 42%,” said Tan Sri Dato’ Seri Mohd Bakke Salleh, Sime Darby Plantation’s Executive Deputy Chairman & Managing Director.

“With the OEIBMS 2.0, we are ready to continue our relentless focus and effort towards higher operational excellence and productivity, while aligning our vision of becoming the leading global integrated palm oil player with the nation’s productivity agenda as laid out in the Malaysia Productivity Blueprint,” added Mohd Bakke.

SD Plantation’s OEIBMS 2.0 was unveiled at the inaugural ‘Sime Darby Plantation Operational & Productivity Excellence Summit’. The event which was jointly organized by the Malaysia Productivity Corporation (MPC), was officiated by the Minister of International Trade and Industry (MITI), YB Dato’ Sri Mustapa Mohamed. The event was also attended by Dato’ Mohd Razali Hussain, MPC’s Director-General, representatives from MPC, as well as PNB Group of Companies and various Small Medium Enterprises. MPC, which has been an instrumental partner to SD Plantation’s pursuit of operational excellence and higher productivity, has pledged to continue its support in the implementation of SD Plantation’s OEIBMS 2.0.

“The Malaysia Productivity Blueprint (MPB) was formulated to boost Malaysia’s economic growth and raise the prosperity of the rakyat in a sustainable manner. It is the aspiration of the MPB for the private sector to drive the nation’s productivity agenda in partnership with the government, and the success of such partnership is crucial as we position the nation for global competitiveness,” said YB Dato’ Sri Mustapa Mohamed, Minister of MITI.

He added, “It is critical for Malaysia to strategise and move from input-driven to productivity-driven growth. Studies undertaken through the MPB revealed that lack of an adequate pool of talent, advancement in technology, a competitive incentive structure for businesses to leverage on, transparent business environment and a productivity mindset had contributed to low productivity growth over the years. However, these challenges can be overcome and become something of the past as the MPB has been structured to overcome these hindrances and steer the economy on the right growth path.”

The MPB was launched by the Prime Minister in 2017 with the aim of achieving 3.7% productivity growth target set in the Eleventh Malaysia Plan (2016-2020). The Blueprint outlines five strategic thrusts, ten national initiatives, 32 sectoral initiatives and 16 key activities. In addition, nine productivity nexus were established to foster greater collaboration among the Government and private sector to boost productivity. It is one of the public-private governance models where the Government plays an enabling role while the private sector leads in implementation efforts on productivity.

Central to SD Plantation’s implementation of its OEIBMS 2.0 is a holistic approach that not only incorporates a vision and measurable target to achieve higher operational excellence and productivity, but also the development of capacity and skills as well as the cultural transformation of its workforce.

Over the course of the last 5 years, SD Plantation has internally developed over 1,500 LSS practitioners and internal consultants, some of which have been certified by the American Society for Quality (ASQ). The Company has also achieved recognitions and awards at various local and international excellence platforms. These include, among others, the Overall Champion at the MPC’s Annual Productivity and Innovation Conference (APIC) 2017, Gold Medalist at the Indonesia’s Operational Excellence Conference (OPEXCON) 2017 and Silver Level Award at the ASQ’s International Team Excellence Award (ITEA) 2017.

More recently, SD Plantation was also selected as a Global Process Excellence (PEX) Awards top five finalist for the Best Improvement Deployment Programme, as well as the top five finalist for the Operational Excellence Leader of the Year Award at the Business Transformation World Summit 2018 in Orlando, Florida.

Kuala Lumpur, 22 February 2018 – Sime Darby Plantation Berhad (SD Plantation) reported a profit before tax (PBT) of RM637 million and a net profit of RM429 million for the second quarter ended 31 December 2017 (Q2 FY2018). This represents an increase of 35 percent and 34 percent respectively, against the same period in the last financial year. The improved performance was attributable to higher earnings from Upstream Malaysia and reduced finance costs as a result of lower borrowings.

For the half year ended 31 December 2017 (1H FY2018), the Group recorded a PBT of RM1,876 million and a net profit of RM1,448 million, representing an increase of 168 percent and 208 percent respectively, compared with the previous corresponding period. The earnings include a gain on sale of land to Sime Darby Property of RM676 million and a one-off reversal of accruals of RM95 million in Q1 FY2018.

“We are very encouraged by the Group’s performance following its listing exercise back in November 2017. Our Upstream operations have been strategically geared towards achieving our initiatives to enhance productivity, profitability and cost efficiency. Accelerated replanting efforts, mechanisation and water management initiatives across our operations are well underway and have shown positive results,” said Tan Sri Dato’ Seri Mohd Bakke Salleh, SD Plantation’s Executive Deputy Chairman and Managing Director.

Q2 FY2018 versus Q2 FY2017 Year-on-Year (YoY) Comparison

Upstream Operations
For the quarter under review, Upstream operations posted a higher profit before interest and tax (PBIT) of 26 percent at RM577 million compared to RM459 million in the previous corresponding quarter.

The Group’s fresh fruit bunch (FFB) production improved by 2 percent from 2.72 million MT in Q2 FY2017 to 2.76 million MT in Q2 FY2018 as it recovers from the impact of El Nino. Average crude palm oil (CPO) price realised reduced by 6 percent YoY to RM2,654 per MT in the quarter under review largely on account of weaker sentiment in the market.

Upstream Malaysia registered a PBIT of RM414 million in Q2 FY2018 versus RM182 million in Q2 FY2017, which represents an increase of 127 percent YoY. FFB production in the region improved by 26 percent to 1.69 million MT from 1.34 million MT in the same period last year. The better performance mainly stemmed from our sustained efforts to improve yield via replanting with superior planting materials. CPO price realised averaged at RM2,706 per MT versus RM2,851 per MT during the same period last year.

Upstream Indonesia recorded a PBIT of RM144 million this quarter compared to RM275 million the same quarter last year, representing a 48 percent decrease. This was primarily due to reduced FFB production of 0.71 million MT this quarter, as compared to 0.94 million MT the same period last year. The weaker production was mainly attributable to productivity in Sumatra being impacted by floods which hindered harvesting activities in the area. The average CPO price realised was also lower at RM2,533 per MT in Q2 FY2018 versus RM2,763 per MT in Q2 FY2017.

Upstream Papua New Guinea and Solomon Islands reported better earnings of RM39 million in Q2 FY2018 against RM17 million in Q2 FY2017. The increase of 129 percent was due to higher sales volume, which compensated the lower FFB production in the quarter under review. FFB production declined by 22 percent as compared to the same quarter last year, generally due to certain areas of PNG being affected by the dry period in June to September 2017. CPO price realised averaged at RM2,713 per MT in the current period versus RM2,961 per MT in the previous corresponding period.

Upstream Liberia registered a loss of RM20 million this period versus a loss of RM15 million the same period last year due to higher amortisation caused by the increase in mature hectarage. Despite this, FFB production in the region had increased five-fold as compared to the previous corresponding period. The average CPO price realised was reported at RM2,275 per MT in Q2 FY2018 versus RM2,499 per MT in Q2 FY2017.

Downstream Operations
Downstream operations recorded earnings of RM64 million in the current period, 41 percent lower compared to RM108 million in the previous corresponding period. This was mainly attributable to weaker profit contributions from the Bulk business which was affected by slower demand and the appreciation of the Ringgit. Meanwhile, earnings from the Differentiated business improved by 14 percent in Q2 FY2018 compared to the same period last year driven by higher sales volume, better contribution margin and higher capacity utilisation.

Other Operations
Other operations reported a PBIT of RM32 million in the current quarter versus RM3 million the same quarter last year. The better results were largely because of the recognition of dividend income of RM39 million from a long-term investment.

Interim Dividend
The Group announced an interim dividend of 3.5 sen per share for the financial year ending 30 June 2018.

Kuala Lumpur, 1 March 2018 - We refer to the report on ‘Maybank: The Single Largest Palm Oil Financier’ from Transformasi Untuk Keadilan (TuK) Indonesia dated 26 February 2018 which mentioned Sime Darby (SDP) as one of the recipients of Maybank’s financial assistance. TUK cited five of SDP operations in Indonesia; PT Mitra Austral Sejahtera (PT MAS) and PT. Swadaya Andika (SAA) in South Kalimantan, PT. Guthrie Pecconina Indonesia (GPI) in South Sumatera , PT ISLM in Belitung and PT. Tamaco Graha Krida (TGK) in Sulawesi. PT GPI, PT SAA and PT TGK, are RSPO certified operations, while PT ISLM is SDP’s only rubber plantation in Indonesia.

The following is our response to the issues highlighted:

Issues regarding PT SAA, PT GPI and PT TGK
These were brought up by Tuk in January 2017 and we have replied to them in detail via our media statements available on our website.

You may click on the links below for the statements issued;
1. Response to TUK
2. Statement on TUK Factsheet
3. Response to Foresthints.news

Issues regarding PT MAS
SDP has already issued a number of statements to the media and TUK reiterating its commitment to continue engaging with the local communities. However, SDP would not be able to satisfy the demands of the communities if it breaches SDP’s terms of its concessions agreement with the Government of Indonesia.

Issues regarding PT ISLM
PT ISLM is working towards resolving and rectifying all the issues outlined by the Ministry within the given timeframe. PT ISLM will ensure compliance with all existing guidelines and regulations. The sanction is in place to allow PT ISLM to resolve outstanding issues which the Ministry has identified.

Error in SPOTT assessments score
In addition to the above, we would also like to highlight a discrepancy in the SPOTT assessments scores highlighted by the report which showed SDP with a less favourable overall score (51%-75%) when in fact, it should have been a good overall score (of >75%) based on the latest SPOTT assessment in November 2017. We view this discrepancy as misleading and demand immediate public clarification by TuK on SDP’s standing based on the actual SPOTT dashboard.

PUTRAJAYA, Mar 28, 2018 - Ecoverse, a Sabahan youth-led social enterprise initiative, entered a momentous CSR partnership today with the signing of a Memorandum of Understanding (MoU) with Sime Darby Plantation Berhad to promote sustainability in Malaysia.

At the signing ceremony, Ecoverse was represented by Mr. Christopher Louis Tan, the Founder of Ecoverse while Sime Darby Plantation Berhad was represented by Mr. Lee Ming Enn, its Principal Sustainability Officer. Mr. Lee Ming Enn was representing Dr. Simon Lord, the Chief Sustainability Officer of Sime Darby Plantation Berhad, at this ceremony as Dr. Simon Lord has been appointed as one of the National Sustainability Champions for Ecoverse’s environmental initiatives.

Speaking at the event, Yang Berhormat Datuk Seri Panglima Wilfred Madius Tangau, the Minister of MOSTI, who witnessed the signing ceremony, said, “The Government is committed to promote innovation within the social enterprise ecosystem especially on matters relating to environmental sustainability as Malaysia is a signatory of the Paris Agreement. This is in line with our sustainability goals under the 11th Malaysia Plan and it is essential for us to engage not just the private sector but to also empower youths to be part of the TN50 agenda from a sustainability perspective.”

Also present at the signing ceremony was Ashran Dato’ Ghazi, the CEO of the Malaysian Global Innovation & Creativity Centre (MaGIC), to witness this significant milestone since the launch of the Impacts Driven Enterprise Accreditation (IDEA) and Social Impact Exchange (SIX) program. Ecoverse will be the first Sabahan Bumiputera youth-led social enterprise initiative to be incubated under MaGIC’s IDEA program to promote environmental sustainability through its ecotourism and volunteering programs.

“None of this would have been possible if not for the guidance support that YB Datuk Seri Panglima Wilfred Madius Tangau has provided to the native communities in Sabah especially to inspire native youths like us to aspire for not just national impact but to showcase our Sabah Youth Boleh spirit on a global scale.”

“Our goal is to create Malaysia’s first youth-led sustainability hub revolving around bamboo plantation on our 79 acres of native lands where visitors can not only experience what sustainable living lifestyle looks like through our homestay programs but they can also be part of the creation process by joining our volunteering programs and workshops to build bamboo crafts and buildings with the local communities. Basically we are providing ecotourism experiences but with a good cause to raise awareness on sustainability through our volunteering and conservation activities in Sabah,” he added.

Sime Darby Plantation Berhad will be providing technical support to assist Ecoverse with its bamboo plantation program to create a bamboo forest carbon sink while also providing sustainable plantation training to the local communities in Labuan and Sabah through Ecoverse. As a leader in plantation sustainability and the world’s largest producer of certified sustainable palm oil, Sime Darby Plantation Berhad’s collaboration with Ecoverse aligns well with the company’s sustainability aspirations and the belief that businesses must not only operate in a sustainable manner, but also contribute towards a better world for the future generation.

“We believe that this initiative has the potential to create a long lasting impact to the environment and local communities through youth skills enrichment, income creation and sustainable use of lands. Sime Darby Plantation is looking forward to work together with Ecoverse in driving positive messages on sustainability and environmental conservation to the general public,” said Dr. Simon Lord.

For more information, please visit www.ecoverse.my

Kuala Lumpur, 17 April 2018 - Sime Darby Plantation Liberia (SDPL) would like to clarify on the video of Oil Palm Fresh Fruit Bunch (FFB) theft happened at Nimba Point in January 2018. Those involved in this incident are not employees of Sime Darby Plantation Liberia with the exception of Boima Feika.

Upon discovery of this incident, SDPL has taken immediate step by suspending its Chief of Security, Thomas Walker. Boima Feika, the personnel that was allegedly mistreating John David, the thief that was caught stealing FFB at Nimba Point has surrendered himself to Liberia National Police (LNP) for further investigation.

SDPL does not condone any use of physical force and ill treatment by any of its employees even to those caught stealing FFB. Anyone caught stealing FFB will be handed over to LNP and SDPL will fully cooperate with the authorities on investigations undertaken by LNP.

We refer to reports by various news publications on what had transpired during the Liberia House of Representatives hearing on Thursday, April 19, 2018. At the hearing, management representatives from Sime Darby Plantation Liberia (SDPL), a subsidiary of SDP, were summoned to provide clarification on the mistreatment allegedly perpetrated by SDPL’s security officers against a Liberian citizen identified as John Davies, the incident of which was video recorded and spread via social media.

SDP would like to express our regret that the General Manager of SDPL was unable to disclose the details of the video during the course of the hearing as requested by the House of Representatives. SDP views this omission as a serious matter and have issued immediate directives for it to be addressed by SDPL.

SDP would like to assure that SDPL's management team will provide full co-operation to the House of Representative and use every opportunity in the next hearing scheduled on 24 April 2018 to demonstrate this commitment.

As a responsible global company, SDP would like to reiterate our commitment and strict adherence to our Human Rights Charter. Where adverse human rights impacts arising from our business activities are identified, we are committed to mitigating the negative effects and where possible to address and resolve such impacts in a timely manner.

Recent reports in the media highlighted concerns over the various facilities at schools and camps within Sime Darby Plantation Liberia’s (SDPL) areas. The Company is well aware of these concerns and are doing our best to address them.

SDPL would like to clarify that these issues are also part of the report by the Liberia House of Representatives ‘Special Legislative Investigative Committee’s Report on the Operation of Sime Darby Plantation Liberia’ The report contains a number of recommendations for SDPL to resolve the issues and the Company is already in the advance stages of implementing these recommendations.

As a responsible company, SDPL appreciates the spirit of the House of Representatives Committee’s report which encourages sustainable and equitable investments in Liberia. We affirm our genuine commitment to continue to work and improve relations with all related stakeholders to promote sustainable and inclusive development.
To date, the progress made by SDPL on the Liberia House of Representatives Committee’s recommendations are as follows:

1. On water facilities
2. On latrine facilities
3. On replacing asbestos roofing sheets as well as improve the structure of the housing units ’
4. On science laboratory and library at schools
5. On regular ambulance service to be provided
6. ‘That those seen in the video torturing a Liberian citizen be identified and prosecuted to serve as a deterrent for would be violators of human rights on the plantation.’
   • Construction of 1 new school in Senii town in 2012 for the 17 Affected Communities and the rehabilitation of other 7 schools within SDPL’s concession areas are ongoing
   • Funding a total of 5,136 students and 135 teachers
   • Providing training facilities for Liberians to undertake estate operations
   • Spending a total of USD 713,000 for Liberian students’ local and international Scholarships

Currently, a total of 44 hand pumps at estate camps are available of which 29 were constructed by NGOs earlier and fully maintained by SDPL’s engineering unit To date, only 3 units are under repair due to wear and tear on the pump cylinder and replacement of the stolen pump head.
SDPL would like to highlight that the water supply from all our hand pumps have been certified safe for drinking and fit for human consumption by the Ministry of Health & Welfare. The company also conducts monthly assessment of the water supply to ensure that it is well in accordance with WHO standard.

Currently a total of 108 latrines are available at estate camps and 31 units at schools. Some latrines at the camp sites have malfunctioned due to clogging as a result of improper usage, as rags and paper are used as toilet paper. To-date 39 latrines have been repaired. Awareness on the proper usage of latrine will be intensified along with plans to provide water facilities next to existing latrine i.e poly tank with rainwater harvesting system.
SDPL has budgeted for year 2018 to construct an addition of about 70 latrines for camps and schools without dedicated latrine.

Progressive roofing replacement and housing rehabilitation will be carried out throughout the 1-year period.

Science laboratory and library are already available, however the equipment and upgrading works will be completed by June 2018. An annex for the cafeteria has been budgeted for construction in October 2018

Regular ambulance service is provided and is adequate to cater for all 4 Estates in SDPL during emergency cases, i.e from field to clinic and from clinic to Monrovia. An additional ambulance has been budgeted for in financial year 2018/2019 to enhance the service for employees and community

Those involved in the video are not employees of SDPL, with the exception of Boima Feika (Acting Chief Security) who underwent a domestic inquiry and has consequently been suspended. Boima Feika has surrendered himself to LNP and the case is currently under Police investigation. SDPL will also continue to collaborate with the Ministry of Justice to improve the standard of conduct and compliance, not only of our employees but also our partners from the local communities to be in line with the Liberia Law. This will entail initiatives to increase awareness on the importance of zero-violence, respect for human rights as well as codes of conduct policy and standard procedures manual. In addition to the above progress updates, to date, SDPL is also proud to be able to deliver other various development to the local communities in the country, including among others:

SDPL will continue to do its best to assist in the rehabilitation and rebuilding of the necessary and basic infrastructure and facilities in its areas of operation in Liberia. On that note, it is equally important for SDPL to reiterate that these development efforts will take time to materialise and must also take into account sensible consideration of the Company’s own business performance. 

Kuala Lumpur, 31 May 2018 – Sime Darby Plantation Berhad (SD Plantation), the world’s largest producer of Certified Sustainable Palm Oil (CSPO), posted a profit before tax (PBT) of RM2,228 million and a net profit of RM1,697 million for the nine months ended 31 March 2018 (9M FY2018), representing an increase of 70 percent and 93 percent respectively compared with the previous corresponding period. The better performance was attributable to stronger overall fresh fruit bunches (FFB) production, lower finance costs and non-recurring gains.

For the third quarter ended 31 March 2018 (3Q FY2018), the Group recorded a PBT of RM352 million and a net profit of RM249 million, a decrease of 42 percent and 39 percent respectively, against the same period in the last financial year.

The Group’s third quarter performance was affected by lower production of FFB particularly in Indonesia, Papua New Guinea and Solomon Islands, as well as lower average crude palm oil (CPO) price and palm kernel (PK) price realised. However, this was mitigated by lower finance costs incurred in line with lower borrowings during the quarter.

“We are encouraged by our earnings for the financial year to-date notwithstanding the challenging business environment that has impacted the Group’s performance in this quarter,” said Tan Sri Dato’ Seri Mohd Bakke Salleh, SD Plantation’s Executive Deputy Chairman and Managing Director.

“As we move towards the final quarter, we remain steadfast to deliver satisfactory results and we believe we are on track to achieve this on the back of continuous efforts to enhance productivity and cost efficiency. We are confident that the various efforts to improve operational performance such as accelerated replanting, mechanisation and water management at our estates, in addition to numerous other initiatives for cost reduction, will support the achievement of our targets,” said Mohd Bakke.

3Q FY2018 versus 3Q FY2017 Year-on-Year (YoY) Comparison

For the quarter under review, the recurring profit before interest and tax (PBIT) declined by 50 percent to RM362 million compared to RM721 million in the previous year corresponding quarter, on the back of lower profit from the Upstream operations arising from weaker FFB production and lower CPO and PK price realised. The Group’s FFB production declined by 5 percent from 2.46 million MT in 3Q FY2017 to 2.34 million MT in 3Q FY2018 due to lower FFB production from Indonesia and Papua New Guinea and Solomon Islands. Average CPO price realised declined by 20 percent YoY to RM2,452 per MT in the quarter under review largely on account of weaker sentiment in the market. The Group expects the full year FFB production to improve from the previous financial year as the El Nino effect tapers off. Although this is expected to continue putting downward pressure on CPO prices, the upcoming festive season, and possible tariffs by China on soybean imports from the US could lend support to palm oil demand.

Upstream Operations

Upstream Malaysia registered a PBIT of RM253 million in 3Q FY2018 versus RM417 million in 3Q FY2017, representing a decrease of 39 percent YoY. This was largely attributable to the lower average CPO price realised at RM2,480 per MT compared to RM2,994 per MT during the same quarter last year. Meanwhile, FFB production in the region improved by 6 percent to 1.37 million MT from 1.29 million MT in the previous year corresponding quarter, mainly stemming from replanting activities showing positive yields.

Upstream Indonesia reported a profit of RM11 million this quarter compared to RM138 million the same quarter last year. The decline in profit was mainly attributable to lower average CPO price realised at RM2,270 per MT in 3Q FY2018 versus RM2,932 per MT in 3Q FY2017, and adverse weather conditions. The weaker performance was due to a reduction in FFB production of 0.52 million MT this quarter versus 0.64 million MT in the same quarter of the previous year.

Upstream Papua New Guinea and Solomon Islands reported lower earnings of RM38 million in 3Q FY2018 against RM181 million in 3Q FY2017, which represents a decrease of 79 percent YoY. FFB production reduced by 16 percent as compared to the same quarter last year, and average CPO price realised declined by 20 percent to RM2,644 per MT in the current quarter versus RM3,304 per MT in the previous year corresponding quarter, whereas production costs are lower in the current quarter.
Upstream Liberia registered a lower loss of RM19 million this quarter versus a loss of RM67 million the same quarter last year.

Downstream Operations

Downstream operations recorded earnings of RM65 million in the current period, 52 percent higher compared to RM43 million in the previous corresponding period. This was mainly attributable to our Differentiated product business, driven by higher sales volume and better contribution margin, resulting from greater capacity utilisation of our speciality refineries in the current quarter.

Other Operations

Other operations reported a PBIT of RM13 million in the current quarter versus RM9 million the same quarter last year. The recognition of dividend income of RM21 million compensated the higher losses from associates and joint ventures.

Kuala Lumpur, 30 August 2018 – For the financial year ended 30 June 2018 (FY2018), Sime Darby Plantation Berhad (SD Plantation) registered a profit before tax (PBT) of RM2,377 million, on the back of an improved overall Fresh Fruit Bunch (FFB) production by its Upstream division in the year under review, and continued earnings improvement from its Downstream operations. However, the PBT represents a decline of 41 percent compared to the PBT recorded in the previous corresponding year, primarily due to a lower non-recurring net profit, although partially mitigated by lower finance costs.

The Group reported a non-recurring profit before interest and tax (PBIT) of RM517 million this year in comparison with a non-recurring net profit of RM2,228 million recorded last year, arising primarily from a gain on sale of land. Recurring PBIT declined by 9 percent year-on-year (YoY) attributable to weaker average crude palm oil (CPO) and palm kernel (PK) prices realised. The Group registered a net profit of RM1,727 million for the full year.

For the fourth quarter ended 30 June 2018 (4Q FY2018), the Group’s PBT and net profit declined to RM149 million and RM30 million respectively. The results were attributable to non-recurring impairment charges of RM283 million compared to a non-recurring net profit of RM2,228 million reported in the corresponding quarter last year, as well as a lower recurring PBIT. The non-recurring impairment charges in the quarter under review primarily consist of an impairment charge of RM112 million relating to the Group’s long term assets in Liberia and an impairment charge of RM157 million in its investment in Verdezyne Inc. (Verdezyne) which is an associate company. The recurring PBIT fell by 22 percent amid weaker CPO and PK prices realised, and marginally lower FFB production posted over the quarter. The decline in earnings was mitigated by lower finance costs of RM44 million arising from lower borrowings during the quarter under review.

“We are operating in a very challenging business environment. This year, despite achieving the strongest yield performance in Malaysia in the last five years, uncertainties surrounding the US-China trade disputes have resulted in greater CPO price volatility, which has impacted the Group’s performance in FY2018. Nevertheless, our continuous efforts to improve operational efficiency, particularly on replanting, mechanisation and water management, have contributed a 5 percent growth in FFB production for FY2018. These initiatives will continue to drive our performance as we move forward into the new financial period,” said Tan Sri Dato’ Seri Mohd Bakke Salleh, SD Plantation’s Executive Deputy Chairman and Managing Director.

“In addition to our continuous drive to improve productivity, two new developments will also provide new synergies to our business. SD Plantation has recently acquired Markham Farming Company Limited (MFCL) in Papua New Guinea (PNG) which brings to the Group 6,110 hectares of agriculture land in Markham Valley, PNG, and two copra mills. The oil palm plantation is well located close to Lae, PNG’s largest port, and has the ability to integrate with New Britain Palm Oil Limited’s (NBPOL) existing supply chain. Moreover, MFCL is the largest exporter of coconut oil in PNG and the acquisition enables SD Plantation/NBPOL to expand its lauric oils business into coconut oil production for captive supply for its refinery blends in Europe,” he added.

“In China, a Memorandum of Understanding with COFCO Group Co. Ltd. on a number of palm oil related ventures has also been signed. This newly formed relationship is expected to create greater demand for our certified sustainable palm oil and increase trade volume between the two companies,” said Tan Sri Dato’ Seri Mohd Bakke Salleh.

4Q FY2018 versus 4Q FY2017 Year-on-Year Comparison

For the quarter under review, recurring PBIT declined by 22 percent to RM472 million compared to RM606 million in the corresponding period last year. The decline in earnings was due to lower profit contribution from the Upstream operations arising from lower average CPO and PK prices realised, and marginally weaker production of FFB. Average CPO price realised declined by 15 percent to RM2,379 per MT whereas average PK price realised declined by 9 percent to RM1,682 per MT in the quarter under review. The Group’s FFB production declined by 1 percent from 2.46 million MT in 4Q FY2017 to 2.44 million MT in 4Q FY 2018.

Upstream Operations.

In 4Q FY2018, Upstream Malaysia registered a recurring PBIT of RM243 million, representing a decrease of 36 percent YoY from RM380 million. The weaker performance was largely due to the lower average CPO and PK prices realised. Average CPO price realised for the quarter under review declined by 14 percent YoY to RM2,415 per MT, whereas average PK price realised declined by 6 percent YoY to RM1,763 per MT. FFB production in Malaysia was lower by 14 percent YoY from 1.41 million MT in 4Q FY2017 to 1.21 million MT in 4Q FY2018. However, the full year FFB production of 5.82 million MT was notably higher compared to the 5.29 million MT in the previous corresponding year, representing an increase of 10%.

Recurring PBIT of Upstream Indonesia increased by 96 percent from RM47 million to RM92 million this quarter, primarily due to higher FFB production and lower production costs. FFB production improved by 26 percent from 0.52 million MT in the same quarter last year to 0.66 million MT this quarter. However, average CPO and PK prices realised for the period under review declined to RM2,161 per MT and RM1,388 per MT respectively in this quarter, representing a 21 percent YoY decrease for both.

Upstream PNG and Solomon Islands reported lower recurring PBIT of RM77 million in the period under review against RM219 million in the previous year corresponding quarter. The decline in profit was attributable to the weaker average CPO price realised which had declined 10 percent YoY to RM2,590 per MT this quarter. Nevertheless, its earnings were supported by better FFB production which improved by 7 percent to 0.55 million MT.

Upstream Liberia registered a lower loss of RM9 million this quarter versus a loss of RM26 million in the same quarter last year, on the back of a 53% increase in FFB production, partially offset by lower average CPO price realised.

Downstream Operations

In 4Q FY2018, Downstream operations reported a recurring profit of RM68 million as compared to RM7 million in 4Q FY2017. The improved performance was driven by better earnings from the differentiated products business as a result of higher sales volume, and better contribution margin due to higher capacity utilisation of the speciality refineries.

Other Operations

Other operations registered a recurring PBIT of RM1 million in the current quarter compared to a loss of RM21 million in the same quarter last year, mainly attributable to a lower share of losses reported by joint ventures, as well as discontinuance in recognising share of losses from an associate subsequent to the full impairment of the carrying amount in the Group's consolidated financial statements.

Dividend

The Group has recommended a final dividend of 8.0 sen per share, which together with the interim dividend of 3.5 sen per share, will translate into a single tier dividend of 11.5 sen per share for FY2018.

The following special single tier dividends have also been declared and proposed:

(i) a cash interim dividend of 3.0 sen per share (ii) a final dividend of 3.0 sen per share.

Both the final dividend of 8.0 sen per share and the special final dividend of 3.0 sen per share are subject to the approval of the shareholders of the Company at the forthcoming Annual General Meeting.

The Company proposes to undertake a dividend reinvestment plan, which is subject to the relevant regulatory approvals and shareholders’ approval being obtained at an Extraordinary General Meeting, and if approved, will apply to the final dividend and the special final dividend.

Kuala Lumpur, 23 November 2018 – For the financial period ended 30 September 2018, Sime Darby Plantation Berhad (SD Plantation) registered a profit before tax (PBT) of RM212 million on the back of weaker average CPO and PK prices realised, which was partly mitigated by higher FFB production and improved oil extraction rate (OER), as well as lower production and finance costs.

The Group reported a recurring profit before interest and tax (PBIT) of RM259 million this quarter as compared to RM512 million recorded in the last quarter. Recurring PBIT declined by 49 percent year-on-year (YoY) due to lower profit contributions from both the Upstream and Downstream segments arising from lower average CPO and PK prices realised, and reduced margins from the differentiated products business. The average CPO price realised declined by 21 percent YoY from RM2,693 per MT to RM2,117 per MT, whereas the average PK price realised declined by 22 percent YoY from RM2,109 per MT to RM1,649 per MT. The decline in earnings was partially mitigated by higher FFB production, which had increased by 2 percent from 2.70 million MT in the previous corresponding period to 2.75 million MT in the three-month period ended 30 September 2018. OER in this quarter also improved slightly YoY from 20.93 percent to 21.06 percent.

“We are well into the half-way mark of the six-month financial period as SD Plantation moves towards 31 December 2018. The business environment remains challenging as the CPO price traded at a low of RM2,065 per MT on 28 September 2018. Nevertheless, we remain steadfast in our drive to improve operational efficiency.

The Group has incorporated new breakthrough technologies and innovations into our operations in line with the aspirations of Industry 4.0. With higher levels of mechanisation and automation, the Group endeavours to increase productivity and contribute to the up-skilling of our workforce. This will mitigate the impact of the upcoming new rate of minimum wage as we maintain prudent cost management,” said Tan Sri Dato’ Seri Mohd Bakke Salleh, SD Plantation’s Executive Deputy Chairman and Managing Director.

Despite a challenging period for the industry, the Malaysian Rating Corp Bhd (MARC) affirmed the Company’s corporate credit rating at AAA with a stable outlook, whilst Fitch Ratings affirmed SD Plantation at BBB+ with a stable outlook. Moody’s has also recently affirmed SD Plantation’s rating at Baa1 with a stable outlook. According to Moody’s Investors Service, Malaysian oil palm planters, particularly companies which comply with tighter sustainability standards of the Roundtable on Sustainable Palm Oil (RSPO), will have better support in their credit ratings. Moody’s report further states that amongst its rated oil palm planter issuers, SD Plantation is best positioned for sustainable practices as it is the largest global producer of certified sustainable palm oil.

“Fundamentally, our operations and finances remain strong. The affirmation by various rating agencies over the course of the past few months augurs well for our business as we move forward into the new financial year in January 2019,” added Mohd Bakke. Three Months Ended 30 September 2018 versus Three Months Ended 30 September 2017 YoY Comparison.

Upstream Operations

In the three-month period ended 30 September 2018, Upstream Malaysia registered a recurring PBIT of RM125 million, representing a decrease of 59 percent YoY from RM304 million. The weaker performance was largely due to the lower average CPO and PK prices realised. Average CPO price realised for the quarter under review declined by 19 percent YoY from RM2,730 per MT to RM2,223 per MT, whereas average PK price realised declined by 18 percent YoY from RM2,162 per MT to RM1,767 per MT. FFB production in Malaysia was lower by 17 percent YoY from 1.55 million MT in the previous corresponding quarter to 1.29 million MT this quarter, on the back of a lower production cycle as compared to the bumper harvest experienced last year. Nevertheless, OER in this quarter improved slightly YoY from 20.21 percent to 20.66 percent as a result of our continuous crop quality improvement initiatives.

Recurring PBIT of Upstream Indonesia decreased by 46 percent from RM117 million to RM63 million this quarter, primarily due to lower average CPO and PK prices realised, which declined by 32 percent YoY from RM2,635 per MT to RM1,803 per MT and 30 percent YoY from RM1,901 per MT to RM1,337 per MT, respectively. This was partially mitigated by higher FFB production, which has increased by 27 percent from 0.73 million MT in the same quarter last year to 0.92 million MT this quarter mainly attributable to our progressive replanting efforts in the previous years showing positive yields. OER for the three-month period ended 30 September 2018 stood at 21.04 percent as compared to 21.33 percent in the same period last year. The YoY decline was due to an increase in newly matured areas with lower oil to bunch ratio.

Upstream Papua New Guinea (PNG) and Solomon Islands (SI) reported a lower recurring PBIT of RM30 million in the period under review against RM38 million in the previous year corresponding quarter. The decline in profit was attributable to the weaker average CPO price realised which had declined by 15 percent YoY from RM2,690 per MT to RM2,289 per MT this quarter, as well as YoY decline in OER from 22.69 percent to 22.11 percent. The decline in OER was attributable to crop quality being affected by the longer harvesting intervals as a result of the increase in crop production. Nevertheless, its earnings were supported by higher FFB production which improved by 27 percent from 0.40 million MT to 0.51 million MT on the back of favourable weather conditions.

Upstream Liberia registered a lower loss of RM18 million this quarter versus a loss of RM23 million in the same quarter last year, on the back of a 86 percent YoY increase in FFB production and lower production costs which cushioned the impact of lower average CPO and PK prices realised.

Downstream Operations

For the quarter under review, Downstream operations reported a recurring profit of RM48 million as compared to RM70 million in the previous corresponding period. The weaker performance was mainly due to lower contribution from the differentiated products business. This was largely attributable to lower sales volume and margins in view of higher competition coupled with the lower seasonal demand. The decline in earnings was partially mitigated by improved performance from the bulk products business due to better margins in Indonesia amid high inventory levels in the country.
Other Operations
Other operations registered a recurring PBIT of RM11 million in the current quarter, representing an increase of 83 percent YoY, mainly contributed by a lower share of losses from associates.