Rimbunan Sawit allocates RM309m in capex, operating and development costs for FY2024

KUALA LUMPUR (April 30): Rimbunan Sawit Bhd is expecting around 40% increase in its fresh fruit bunches (FFB) production for the current financial year ending Dec 31, 2024 (FY2024) and is anticipating higher crude palm oil (CPO) prices for the year due to growing demand.

“In FY2024, our estates are strategically planned to harvest an impressive 352,126 tonnes of fresh fruit bunches [FFB], each fetching an average price of RM648 per tonne,” the plantation group said in its Annual Report 2023.

In comparison, the group reported a production volume of 250,750 tonnes of FFB in 2023, with an average price of RM661 per tonne, according to its quarterly result release filed to Bursa Malaysia.

However, Rimbunan Sawit anticipates the production volume of CPO and palm kernel (PK) to remain nearly unchanged at 104,831 tonnes and 24,076 tonnes, respectively.

Meanwhile, the plantation company is expecting an upward trend on CPO price.

“The average CPO price is projected to rise in 2024, supported by growing demand and initiatives like B35 in Indonesia, promoting biodiesel,” said its managing director Tiong Chiong Ie in Rimbunan Sawit’s Annual Report 2023.

The B35 programme, which was fully implemented by the Indonesian government last year, mandates a 35% palm oil blend in biodiesel.

At the time of writing, CPO three-month futures were traded at RM3,850 per tonne. Year-to-date, CPO prices have climbed 4.7%.

To support such endeavours, the group said it has allocated as much as RM308.5 million for the operating costs, capital expenditures and plantation development expenditures of FY2024.

Of the total budget, RM249 million will be allocated for operating costs, while RM25.5 million will be allocated for strategic capital expenditures.

The remaining RM34 million will be allocated for plantation development expenditures, encompassing land preparation for replanting (RM18 million), immature oil palm (RM11 million), nursery (RM4 million) and new development (RM1 million).

The significant budget allocation — which represents around 60% of its FY2023 revenue of RM507.76 million — aligns with the group’s optimism for the Malaysian oil palm industry amid increased crude palm oil (CPO) production, higher palm oil prices and rising global demand.

Rimbunan Sawit reported an annual revenue of RM507.76 million in FY2023, down 24.9% from RM675.91 million in FY2022, due to lower average selling prices of FFB, CPO and palm kernel (PK) by 28.7%, 23.8% and 33.9% respectively.

Despite lower revenue, the group posted a net profit of RM24.48 million in FY2023, compared to a net loss of RM330,000 in FY2022, partly due to aggressive cost control measures and disposal of estates.

At Tuesday’s market close, shares of Rimbunan Sawit remained unchanged at 25 sen, valuing the group at RM510 million. The group has gained nine sen or 56.25% since the start of the year.