Three point four tonnes of fruit per hectare, down from 3.8. That small-looking slip in yield sits at the centre of Boustead Plantations Bhd’s third quarter, which ended in a net loss of RM352,000 against a net profit of RM95.56 million a year earlier.
The detail that matters is why the fruit fell short. Fresh fruit bunch (FFB) output for the quarter was 227,335 tonnes, 14% under the 263,276 tonnes of the prior-year quarter, and the group blamed a shortage of harvesters in Sabah and Sarawak. A plantation can have the trees and the fertiliser and still lose the crop if nobody is there to cut it.
Prices did not help. Revenue for the quarter to Sept 30, 2022 dropped 18.2% to RM240.25 million from RM293.77 million. The average crude palm oil (CPO) price came in at RM4,089 per tonne, down from RM4,331. Palm kernel averaged RM2,494 per tonne, against RM2,541.
The cost side
Under the hood, costs were as unkind as prices. Manuring expense rose to RM21.2 million from RM6.2 million as fertiliser got dearer. The group also took an RM11.9 million hit on the valuation of its FFB after CPO prices fell, where the same line had produced a RM10.1 million gain before. Profit from operations ended at RM1.4 million, compared with RM133.1 million.
Acting chief executive officer Fahmy Ismail does not expect relief on costs. “High production cost due to the impact of minimum wages coupled with higher fertiliser and diesel prices will continue to be a challenge in the remaining year,” he said. He also forecast highly volatile palm oil prices until year end, with stocks likely to run high in Malaysia and Indonesia during the high crop season.
Read the nine-month figure carefully
Over nine months, Boustead reported net profit of RM508.02 million, up from RM156.16 million, on revenue of RM913.37 million versus RM708.49 million. It looks healthy until you check what is in it. A RM364.1 million gain on the Kulai Young land disposal and RM3.6 million from a government land acquisition at Telok Sengat Estate account for the bulk of the increase.
The company’s answer is mechanisation. Fahmy said the group is committed to the Reinventing Boustead Strategy, which aims to make Boustead a technology-based plantation company, and he pointed to better FFB yields in Peninsular Malaysia and Sabah from its Plantation Performance Improvement Programme.
A third interim dividend of 1.1 sen per share will be paid on Dec 22.
Sources
- Boustead Plantations in the red in 3Q due to lower palm product prices, higher operating costs
- Boustead Plantations slips into red in Q3 on lower palm product prices
