KUALA LUMPUR (Aug 10): MHC Plantations Bhd’s net profit fell 73.75% to RM4.28 million in the second quarter ended June 30, 2023 (2QFY2023) from RM16.31 million a year ago, due to falling selling prices of oil palm products.

The group said the average selling prices (ASP) of crude palm oil (CPO) fell 43% year-on-year while that of palm kernel (PK) dropped 46% in the same period.

At the same time, the selling prices of fresh fruit bunches (FFB) declined 48% and empty fruit bunch oil was down by 39%, its bourse filing showed, though sales volume for FFB rose 9% while CPO climbed 6% and PK went up 19%.

According to MHC, the ASP for CPO fell to RM3,829 per metric ton (MT) in 2QFY2023 from RM6,661 per MT a year ago, while PK’s ASP dropped to 1,983 per MT from RM3,669 per MT. FFB’s ASP fell to RM691 per MT from RM1,329 previously.

As a result, its earnings per share dropped to 2.18 sen in 2QFY2023 from 8.3 sen in 2QFY2022. Quarterly revenue declined by 36.2% to RM115.34 million from RM180.79 million a year before.

No dividend was declared during the quarter under review.

For the first six months of FY2023, MHC's net profit shrank 74.75% to RM7.1 million from RM27.78 million the year before while revenue dropped 33.47% to RM222.32 million from RM334.14 million.

Moving forward, the group expects CPO prices to be firm in the second half of 2023 in view of the lower-than-expected overall production in Malaysia and Indonesia amid the prolonged Russia-Ukraine conflict.

Its own FFB production, meanwhile, should increase in FY2023 due to more replanted areas reaching maturity and improvement in labour shortages, it said.

Meanwhile, the group said it will stay focused on improving cost efficiencies, increasing yields, and enhancing productivity through mechanization efforts and the replanting of older and less productive oil palm stands.

MHC Plantations' share price closed 0.5 sen or 0.53% lower at 93.5 sen on Thursday (Aug 10), giving the group a market capitalisation of RM184 million.