KUALA LUMPUR, Sept 3 — Sime Darby Plantation Bhd (SD Plantation) expects to generate an annual reported profit before interest and tax (PBIT) of around RM1.7 billion over the next two years, based on the assumption that crude palm oil (CPO) price will hover around RM2,300 per tonne.
In a statement today, Moody’s Investors Service said SD Plantation’s upstream operations would contribute more than three quarters of the total PBIT while downstream operations, which included bulk refineries, specialty fats and oleochemicals, would continue to grow.
“Consolidated PBIT declined nine per cent, year-on-year, to RM2 billion driven by weakness in SD Plantation’s upstream plantation business, consisting of CPO and palm kernel sales, as CPO and palm kernel prices declined 11 per cent and 13 per cent, respectively,” it said.
Meanwhile, Moody’s expected SD Plantation to remain prudent with its investments.
“While periodically seek similar-sized investments, we expect said is expect its management to maintain a conservative approach towards further investments,” it said, adding that SD Plantation was also conducting a strategic review of its loss-making operations in Liberia.
Moody’s said SD Plantation declared a final dividend for fiscal 2018 of RM544 million in addition to its interim dividend of RM238 paid during the year.
It also declared a special dividend of RM408 million from its RM491 million non-recurring income during the year, which included gains on sale of land.
“The special dividend is credit negative as it will increase the company’s cash needs over the next 12 months.
“However, the cash outflow for dividends will be lower than total dividends declared because SDP plans to establish a dividend reinvestment plan, which allows shareholders to reinvest their cash dividends into additional shares,” it added. — Bernama
