IJM Plantations posts record profit and revenue in FY21 on higher commodity prices

KUALA LUMPUR (May 27): IJM Plantations Bhd has posted its highest ever net profit and revenue for the financial year ended March 31, 2021 (FY21).

The net profit was RM205.08 million, which compares with a net loss of RM62.42 million for FY20.

Revenue, meanwhile rose to a record RM935.69 million, up 26.6% from RM739.13 million previously, the group's bourse filing showed.

IJM Plantations said higher commodity prices and higher volumes of crude palm oil (CPO) sold lifted its full-year top and bottom line.

Malaysian CPO prices, it said, increased 28.3% to RM2,912 a tonne, from RM2,269 in FY20. Indonesian CPO prices rose 18.1% to RM2,424 from RM2,052.

As for CPO sales volume, the group's Indonesian operations saw the biggest increase at 154,711 tonnes, up 11.8% from 138,334 tonnes in FY20. Malaysian CPO sales volume rose 2.6% to 130,755 tonnes from 127,467 tonnes.

IJM Plantations declared a dividend of 10 sen, versus two sen for FY20, payable on July 30.

For its fourth quarter (4QFY21), the group was back in the black with a net profit of RM59.42 million, compared with a net loss of RM76.39 million a year earlier. Quarterly revenue increased 26.1% to RM246.38 million, from RM195.39 million in 4QFY20.

On a quarter-on-quarter basis, the group’s net profit declined from RM66.59 million in 3QFY20, while revenue fell from RM271.96 million.

In a statement, IJM Plantations said its prime oil palm age profile in its Indonesian operations is nearly 60%, with a weighted average age of 9.8 years. It also said that it has substantially completed its replanting programme in Sandakan, Sabah and noted that good yields are already showing, following the use of advanced planting material and continued employment of best plantation practices.

CEO and managing director Joseph Tek said many analysts are expecting the buoyant CPO price trend to sustain only until the middle of this year, before prices start to ease.

He said there may be some price cushioning effect from the supply side, as this year’s CPO production may disappoint earlier production forecasts.

"Many CPO production areas continue to be hampered by acute labour shortages amid the Covid-19 pandemic, resulting in continued crop losses. There is also the aftermath from earlier high rainfalls resulting in lower oil extractions from poorly pollinated bunches ie. parthenocarpy effect, while many plantation maintenances including fertiliser application have been carried forward due to weather and labour shortages.

"And the problem of ageing and tall oil palm trees lingers. In addition, amid the Covid-19 pandemic, there may be additional restrictions rolled out by authorities in producing countries that may curb production and also disrupt palm oil supply chain,” Tek said.

He added that CPO futures may see price downward correction set against various bearish factors, but also may be set against a lower-than-expected CPO production.

IJM Plantations shares closed unchanged at RM1.88 today, valuing the planter at RM1.66 billion.