TSH Resources core profit before tax up 63%

PETALING JAYA: TSH Resources Bhd saw its core profit before tax (PBT) for the first quarter ended March 31, 2017 jump 63% year-on-year to RM41.1mil, mainly due to higher average crude palm oil (CPO) prices and higher fresh fruit brunch (FFB) production as well as higher profit contribution from an associate company.

The Sabah-based firm said its core PBT was also boosted by lower production cost.

Revenue for the quarter was also up 42.6% to RM288.5mil.

However, profit before tax for the quarter decreased to RM48.9mil on the back of lower foreign exchange gains of RM7.8mil.

TSH Resources said that the higher average CPO selling price of RM2,985 during the quarter had contributed to the improved core PBT margin.

“The oil palm plantations within TSH continue to show signs of leaving behind the lagged effects caused by one of the worst El Nino in recent history, which occurred in 2015.

“The company expects the FFB production in the forthcoming quarters to improve in line with the recovery from the impact of El Nino, coupled with growing maturity profile and the higher yielding ages of oil palm trees,” the group said in a statement.

With higher FFB output and stringent cost control, the group said it expected to reduce the unit cost of production this year, resulting in better profit margins, barring any unforeseen volatility in CPO prices.

The group’s palm product segment reported a higher operating profit of RM50.5mil due to higher average CPO price of RM2,985 per tonne compared to RM2,144 per tonne a year ago.

On its prospects for the year, the group said that it expected seasonal crop production in the forthcoming quarters to improve after recovering from the adverse effects of the El Nino.

The company added that the palm products segment, which accounted for over 85% of the group’s revenue and profit, would remain a significant contributor to its profit.

“Production should also be leveraged by the better age profile as more oil palm trees reach optimum yield and with more planted areas growing into maturity and harvesting stages,” it said.