SIME PLANTATION: COST TO RISE WITH HIGHER WAGES
Industry players want govt to reconsider RM1,500 threshold
SIME Darby Plantation Bhd expects its labour cost to increase substantially if the minimum wage is raised to RM1,500. Executive deputy chairman and managing director Tan Sri Mohd Bakke Salleh said labour expenses would jump to 35 per cent of total production cost if the RM1,500 threshold was implemented.
“Currently, labour cost makes up 26 per cent of our production cost. Should the minimum wage be raised to RM1,500, we will see this percentage widen to 35 per cent of our production cost,” he said at a press conference on Sime Plantation’s interim results, here, yesterday.
The Pakatan Harapan government had pledged to raise the minimum wage to RM1,500 from RM1,000 if it won the 14th General Election.
Bakke said like all plantation companies, Sime Plantation had to contend with rising labour cost over the past few years due to higher wages.
He said industry players, through their trade bodies, were working on a petition for the government to reconsider raising the minimum wages.
Dragged down by lower palm oil price and harvest, Sime Plantation’s third-quarter profit ended March 31 dropped 39 per cent to RM249 million from RM410 million a year ago.
Revenue dipped 16 per cent to RM3.66 billion from RM4.35 billion previously.
For the nine months, the group raked in 93 per cent more net profit to RM1.7 billion on the back of a RM11.29 billion revenue.
“We are encouraged by earnings for the financial year to date, notwithstanding the challenging business environment that has impacted the group’s performance in this quarter,” said Bakke.
He said the group’s third-quarter performance was affected by lower production of oil palm fruits, particularly in Indonesia, Papua New Guinea and Solomon Islands. This was coupled with lower average palm oil and palm kernel oil prices.
On the whole, profit was also mitigated by lower finance costs incurred in line with lower borrowings during the quarter.
On its interest to buy into India’s Ruchi Soya Industries Ltd, Bakke said the group had aborted the plan and the US$35,000 (RM139,465) deposit had been refunded.
He said the palm oil price was likely to trade between RM2,400 and RM2,500 per tonne in the immediate weeks.
He cautioned that currency fluctuations and production volume of rival vegetable oils would hugely influence price movements.
For the past month, the thirdmonth benchmark palm oil futures on the Bursa Malaysia Derivatives Exchange had been hovering at RM2,400 a tonne.