KUALA LUMPUR (July 24): United Plantations Bhd’s net profit for the second quarter ended June 30, 2023 (2QFY2023) fell 13.87% to RM159.02 million, from RM184.63 million a year ago, on lower revenue. Earnings per share dropped to 38.34 sen from 44.51 sen.

Quarterly revenue declined 32.96% to RM470.07 million, from RM701.26 million previously, as both the plantation and refinery segments recorded lower revenues, the Perak-based group said in a bourse filing.

The lower revenue in the plantation segment was due to lower crude palm oil (CPO) and palm kernel (PK) production and lower average prices.

The average CPO price was RM3,790 per tonne, down 4.3% year-on-year (y-o-y), while the average PK price was RM1,964 per tonne, down by 37.7% y-o-y.

The production of CPO and PK also decreased by 6.8% and 8.9% y-o-y, respectively.

“The factors above, together with higher costs of production in the current period as a result of higher fertiliser inputs, higher minimum wages and the new collective agreement, which was concluded in the second half of 2022 (2H2022), resulted in the decrease of the profit before tax of this [plantation] segment by 23.3%," it said.

For the cumulative six months ended June 30, United Plantations’s net profit grew 10.96% to RM271.11 million, from RM244.33 million in the same period last year, while revenue was down 30.81% to RM930.06 million from RM1.34 billion.

On prospects, United Plantations said the group is mindful of the challenges which 2H2023 will bring, especially amidst the uncertainties of high inflation and recession fears coupled with the ongoing Russia-Ukraine war and its continued impact on global supply chains.

"Whilst costs of energy, fertilisers, chemicals, building materials and spare parts have come down from earlier highs, they are still above levels experienced a few years ago, resulting in our cost base increasing to its highest levels ever," the group said.

United Plantations said that it will alleviate these challenges as it is vital part of the group's daily operations, while continue to identify areas that can improve its cost efficiencies without compromising on quality.

"Based on the current palm oil prices and the company’s focus on securing the budgeted crop in 2H2023, the board of directors expects that the results for the year will be satisfactory," it added.

Shares of United Plantations settled 16 sen or 1.01% higher at RM16.06 on Monday, valuing the group at RM6.69 billion.