KUALA LUMPUR: United Plantations Bhd’s net profit shrunk 22.4 per cent to RM87.25 million in the second quarter (Q2) ended June 30, 2018 from RM112.41 million recorded in the same quarter a year ago.
Its revenue in the same quarter dropped 14.6 per cent to RM309.93 million from RM355.26 million.
In a filing to Bursa Malaysia, United Plantations said this was due to a 14.2 per cent drop in the revenue from the refinery segment.
For the six months period, United Plantations’ net profit was 1.9 per cent lower at RM187.75 million from RM191.28 million, while revenue eased 13.5 per cent to RM635.47 million from RM734.49 million.
United Plantations said during Q2, the palm oil production recovery in Malaysia and Indonesia had slowed a little resulting in a stabilisation of prices from the downtrend experienced since 2017.
“This has mainly been due to a natural slowdown after a strong first quarter production combined with the Ramadan festive period which resulted in a reduced number of harvesters available due to the holiday season.
“As a result, stock levels of palm oil started to reduce, however, with a slower than anticipated pace because of lower exports into China and specifically India,” it said.
It said nevertheless, stock levels of palm oil have therefore remained higher than initially anticipated, resulting in prices coming under pressure again.
“With employees returning after the Ramadan festive season and slower than expected exports combined with production starting to increase, prices during the end of the second quarter have resumed the downtrend reaching new lows of RM2,150 per tonne not experienced since 2008,” it said.
It expects further production increase during Q3 which will build stocks and likely result in palm oil prices moving lower from current levels.
United Plantations said any change in policies and production of biodiesel must therefore be watched closely as it would have a direct impact on the vegetable oil price complex going forward.