KUALA LUMPUR (May 24): Hap Seng Plantations Holdings Bhd saw its net profit for the first quarter ended March 31, 2023 (1QFY2023) decline by 77% year-on-year to RM23.42 million from RM101.67 million, affected by lower revenue and other operating income as well as the absence of a gain on disposal of assets.

Notably, the last corresponding quarter ended March 31, 2022, included the gain on disposal of assets held for sale of RM18.8 million.

Consequently, Hap Seng Plantations’ basic earnings per share for 1QFY2023 fell to 2.93 sen, 77% below 1Q2022 of 12.71 sen.

The palm oil producer in Sabah said that its revenue decreased by 34% in 1Q to RM159.93 million from RM242.15 million a year ago, dragged by lower average selling price of all palm products despite the sales volume and production of crude palm oil and palm kernel were above 1Q2022.

Hap Seng Plantations added that it had recorded a lower gain from fair value adjustments of biological assets amounting to RM2.33 million in 1QFY2023, compared with RM8.68 million a year ago, it said from its Bursa Malaysia filings on Wednesday (May 24).

Besides that, the group said the current quarter has the absence of the RM18.8 million it included in 1QFY2022 arising from the completion of disposal of assets held for sale.

Meanwhile, it said production costs continued to be affected by higher fertiliser and diesel prices, as well as the increase in the minimum wage.

The group expects its results for the financial year ending Dec 31, 2023 (FY2023) to be influenced by movements in commodities prices, high production costs and uncertainties in the global economies.

Hap Seng Plantations said it is challenged by inflationary pressures and will focus on improving the overall cost efficiencies of its operations, as well as improving fresh fruit bunches yield and oil extraction rates.

Hap Seng Plantations also announced on Wednesday the retirement of its independent and non-executive director Andrew John Barber, who was appointed the position three years ago.

Share price of Hap Seng Plantations closed the day at two sen or 1.04% lower to RM1.90, valuing the group at RM1.52 billion.