Sime Darby Plantation may exit Liberian business

KUALA LUMPUR: Sime Darby Plantation Bhd may dispose of its loss-making oil palm and rubber plantation business in Liberia upon completion of the group’s internal review.

According to Sime Darby Plantation deputy managing director and chief operating officer for upstream business, Mohamad Helmy Othman Basha, the disposal of its Liberia-based plantation business is one of the options being considered by the company.

When asked about the rationale behind the review on the Liberian assets, Mohamad Helmy said the business has been a drag on the overall group performance over the years, losing RM40mil to RM50mil annually.

The oil palm grower had signed a 63-year concession agreement with the Liberian government to develop 220,000ha in Grand Cape Mount, Bomi, Gbarpolu and Bong into oil palm and rubber plantations, according to Sime Darby Plantation’s website. To date, 10,508ha have been planted in five estates, namely, Matambo, Grand Cape Mount, Zodua, Bomi and Lofa. Out of the total planted area of 10,508ha, 10,401ha are planted with oil palm and 107ha with rubber.

“There are only a few options available. Finding a third party to take over or handing back the asset to the Liberian government are among the options.

“We have almost completed the review and are going to present to our board of directors in April and to our annual general meeting in May,” Mohamad Helmy told reporters on the sidelines of the Invest Malaysia event yesterday.

Moving forward, Mohamad Helmy said Sime Darby Plantation aims to increase its footprint in the downstream business segment.

The company plans to increase its downstream segment revenue contribution to about 20%, up from the current 10% to 15%.

Over the long run, he expects the revenue contribution to rise further to 30% to 40%.

Meanwhile, on a separate development, Sime Darby Plantation told the stock exchange yesterday that Permodalan Nasional Bhd (PNB) has ceased to be a substantial shareholder of the oil palm grower. PNB had earlier sold 50 million ordinary shares in Sime Darby Plantation on March 13, leaving it with 4.324% equity interest in the company.