TH Plantations reaps benefit of higher prices

> Third quarter net profit surges more than threefold to RM19.18m

KUALA LUMPUR: TH Plantations Bhd (THP) reported a more than threefold jump in net profit to RM19.18 million for the third quarter ended Sept 30, 2016, compared with the same period last year, attributed mainly to higher revenue, driven by better average sale prices.

It reaped RM170.31 million revenue in the quarter, a 28% jump from RM133.49 million a year ago, boosted mainly by higher average realised prices of crude palm oil (CPO), palm kernel and fresh fruit bunches (FFB).

On average, the group’s trading price for CPO was RM2,559 per tonne, 23% higher than in the same period last year. Palm kernel traded at about RM2,456 per tonne, almost 85% higher than the comparative quarter last year. The group’s average realised CPO selling price was RM2,451 per tonne while its average realised palm kernel selling price was RM2,405 per tonne, increasing 20% and 80% respectively. FFB production in 3Q16 dropped by 7% compared with last year to 234,005 tonnes, while palm kernel production fell by 9% to 11,029 tonnes.

THP CEO and executive director Datuk Seri Zainal Azwar Zainal Aminuddin said commodity prices continued to trade at encouraging levels, supported by lower production across the industry, depleting stocks, weaker currencies and possibly higher biodiesel mandates. Higher CPO and palm kernel prices more than offset the effects of lower production and yields, which continue to suffer from the lagged effect of El Nino, the weather phenonmenon.

“Nevertheless, we are encouraged to see significant improvement in production on a quarter to quarter basis, with 3Q16 FFB production growing by 31% compared to the previous quarter this year. This marked improvement may be an indication of stronger recovery in production, and we hope that it will continue to recover in the coming quarters,” said Zainal Anwar.

For the first nine months of the year ended Sept 30, 2016, the group reported a 9.4% higher net profit of RM19.61 million from RM17.92 million a year ago and revenue of RM392.23 million compared with RM325.98 million in the previous corresponding period.

“We have remained resilient amid the challenges faced by the industry. Lower production hit us hard, particularly in the first quarter of this year, but we are pleased to report that our overall production to date has not been as significantly impacted as compared to other industry players.

“This is a result of our growth strategy, from which we see a steady stream of new areas coming into maturity throughout these few years ... of course, in the initial stages of maturity the yields of these areas are inevitably lower, but their contribution has helped us take advantage of the high commodity price environment and boost revenues,” Zainal Anwar said.