KUALA LUMPUR – Malaysia’s Sime Darby Plantation Berhad reported a higher fourth-quarter net profit on Friday, fuelled by rising prices of palm oil, and said it expected production to pick up in the second half of this year.
Profit for the October-December period rose to 468 million ringgit ($112 million) from 149 million ringgit a year earlier, while revenue climbed 53% to 5.55 billion ringgit.
Malaysian plantations have suffered a severe labour crunch worsened by pandemic-induced border closures, which cut production and pushed benchmark prices of crude palm oil to records.
Crude palm oil prices are expected to stay elevated through the first half of the 2022 amid supply constraints, Sime Darby, the world’s largest oil palm planter by landholdings, said in an exchange filing.
But it expects production to increase in the second half of the year, in line with the high-crop season and as the government looks to free up recruitment of migrant workers, the company said.
“Although the threat of COVID-19 persists, the group anticipates that with better control measures and responses, the return to normalcy across the world will pick up pace, together with a corresponding increase in demand,” it said.
The company expects satisfactory performance for financial year 2022, it added.
Mechanisation, automation and digitalisation of its operations will be a top priority this year, Sime Darby said, as the group looks to reduce dependence on manual labour.
The firm, whose products have been barred by U.S. authorities over accusations of forced labour, said it looked forward to soon completing an independent assessment of labour operation.
This week, the company said it would set aside about $20 million to compensate migrant workers who paid recruitment fees to secure jobs, a practice that often leads to debt bondage.
(Reporting by Rozanna Latiff; Editing by Clarence Fernandez)