Sime Darby Plantation Registers Net Profit of RM846 million for 1H FY2020

• Higher CPO price lifted profits
• Labour shortage to have a major impact on crop production in 2H FY2020

Kuala Lumpur, 27 August 2020 – For the six months ended 30 June 2020, Sime Darby Plantation (SD Plantation) Group reported significantly improved year-on-year (YOY) results on the back of stronger crude palm oil (CPO) and palm kernel (PK) prices realised.

This helped mitigate the impact of the COVID-19 pandemic on the results of its downstream subsidiary, Sime Darby Oils (SDO). SDO’s bulk operations margins and demand for its packed products from the F&B sector, particularly in Europe were adversely affected by the lockdown measures enforced by countries worldwide.

Key Highlights

• 1H FY2020: Strong recurring PBIT of RM730 million and a non-recurring PBIT of RM459 million (from disposal of non-core and underperforming assets)
• Q2 FY2020: Higher FFB production Y-o-Y and improved contribution from its Papua New Guinea/Solomon Island (PNG/SI) sugar operations

Chairman, Tan Sri Dato’ Seri Haji Megat Najmuddin bin Datuk Seri Dr Haji Megat Khas said:
“We were able to mitigate the impact of various risks on different segments of our business partly because of our presence along the full spectrum of the palm oil value chain. This has allowed us to remain focused on the priorities that matter amid this challenging global environment – the health and safety of our employees and various stakeholders, as well as job protection and cash conservation.”

Group Managing Director, Mohamad Helmy Othman Basha, said:
“We expect demand to improve in the second half of this year as countries ease lockdown restrictions allowing businesses to replenish stocks. We anticipate prices to remain stable in the second half of the year given concerns about edible oil supplies due to a potential La Nina.”

The Group declared an interim dividend of 2.57 sen per share and a special interim dividend of 1.45 sen per share, which will be paid to shareholders on 26 November 2020.

OUTLOOK FOR 2H FY2020

• The worsening foreign labour shortage in Malaysia, subsequent to travel restrictions imposed to prevent the spread of COVID-19, is expected to impact crop production.
• To mitigate the labour shortage, the Group is actively exploring all avenues available, including recruiting local employees as well as enhancing mechanisation and digitalisation efforts.
• Barring any extreme weather abnormalities, the Group expects its full year FY2020 FFB production to remain relatively unchanged.
• The Group’s performance for the financial year ending 31 December 2020 will continue to be impacted by the economic uncertainties from a potential second wave of COVID-19 infections.