United Malacca's 1Q net profit up 17% on higher palm oil prices

KUALA LUMPUR (Sept 21): United Malacca Bhd’s net profit rose 16.59% to RM24.3 million for the first quarter ended July 31, 2022 (1QFY23), from RM20.85 million a year earlier, on higher earnings contribution from its Malaysia operations on the back of higher palm oil prices.

Earnings per share increased to 11.59 sen from 9.94 sen, the group’s bourse filing showed.

Quarterly revenue climbed 45.77% to RM167.44 million — its highest to date — from RM114.87 million for 1QFY22.

United Malacca said its Malaysian operations saw a quarterly profit of RM36.2 million, which was 50% higher than the RM24.1 million reported for 1QFY22.

In contrast, the group’s Indonesian operations recorded a plantation loss of RM3.2 million compared with a profit of RM900,000 previously, due to lower production, as well as a higher unit cost of production despite higher crude palm oil (CPO) prices.

The average CPO price during the quarter increased by 48% in Malaysia and by 37% in Indonesia year-on-year, while the average price for palm kernel rose by 15% and 78% respectively.

Looking ahead, United Malacca expects fresh fruit bunches (FFB) production to increase during FY23, due to higher yields and better palm age profile.

Additionally, the group’s priority remains focused on improving labour productivity, mechanisation initiatives and cost efficiency, as well as increasing FFB yield.

However, United Malacca expects an increase in operating costs resulting from higher material and labour costs.

“In addition, continuing acute labour shortage for [the] Malaysian operations and high rainfall could lead to lower FFB production in the first half year of FY23,” it said.

United Malacca’s share price closed three sen or 0.56% higher at RM5.43 on Wednesday (Sept 21), bringing it a market capitalisation of RM1.14 billion.