Boustead Plantations Bhd's net profit plunged 98.8 per cent to RM5.22 million for the first quarter ended March 31, 2023 (1Q23) from RM435.16 million a year ago.
The company attributed this to the substantial downturn in palm product prices during the quarter under review and negative effect on the valuation of fresh fruit bunches (FFB).
"Moreover, last year's first quarter results benefitted from a gain on the disposal of the Kulai Young land," it said in a statement today.
Revenue fell 38.4 per cent to RM199.74 million from RM324.16 million in the corresponding quarter last year, the company's filing to Bursa Malaysia today showed.
Earnings per share came in lower at 0.23 sen compared with 19.43 sen previously.
Boustead Plantations declared an interim single-tier dividend of 1.0 sen per share for the year ending December 31, 2023, in alignment with the company's steadfast dedication to maximising shareholder value.
The dividend is slated for disbursement on June 23 to all shareholders on the register as at June 9.
Boustead Plantations acting chief executive officer Fahmy Ismail said despite the challenges in the industry and the slight reduction in production this quarter, the company was encouraged by the resilience it had shown.
"A key aspect of our yield improvement initiatives is our ongoing replanting scheme, aimed at reducing mature areas and cultivating higher yielding trees, set to enhance our operational efficiency and profitability in the years to come.
"As we continue to navigate the complexities of the palm oil industry, our strategic trajectory is defined by our yield improvement initiatives, along with progressive digitalisation and mechanisation initiatives," he added.
Fahmy said these strategic efforts were crucial in ensuring the company's sustained performance and growth over the longer term.
He added that even as the company adopted technological advancements, its commitment to exemplary standards of environmental, social, and governance (ESG) principles remainef unwavering.
Meanwhile, Boustead Holdings Bhd group chief executive officer Izaddeen Daud said Boustead Plantations' ability to remain profitable, particularly in the face of substantial industry headwinds in the first quarter of 2023, demonstrated the company's solid foundation.
He noted that the company would continue to focus on ongoing operational improvements to weather through the volatile landscape, with challenges expected to persist.
Boustead Plantations said its profitability for this year was dependent on the price direction for crude palm oil (CPO) and crop production.
It said palm oil production in 1Q23 had been adversely impacted by the heavy rainfall and flooding phenomenon in parts of Malaysia.
"However, CPO production is forecasted to trend higher in second half of 2023 (2H23) following the expected improvement in weather condition in the months ahead," it noted.
Meanwhile, the company said palm oil prices remained favourable in 1Q23 driven by lower production of other vegetable oil in Ukraine due to ongoing war with Russia, rising biodiesel demand and increase in edible oil imports by China, among others.
CPO prices are expected to weaken in 2H23 due to expected higher CPO production season, high inventory level and subdue demand.
Nevertheless, Boustead Plantations said it was optimistic that the gradual return of foreign workers would lift the FFB yield, which could partially offset the impact of lower CPO prices and rising costs.