By Rupinder Singh
Published: 2008/11/29
SIME Darby Bhd (4197) , the world's largest listed palm oil producer, said first quarter net profit jumped 44 per cent but it halved its full year earnings forecast due to lower palm oil prices and concerns of an economic slowdown.It now expects net profit for the year ending June 30 2009 to reach RM1.9 billion, from its initial target of RM3.7 billion.Chief executive officer Ahmad Zubir Murshid said the current year will be "very challenging", as global economic growth is expected to weaken significantly.
The lower full year earnings is based on the assumption that CPO price is traded at RM1,700 per tonne, he told reporters after announcing the company's results in Kuala Lumpur yesterday.Currently, CPO price is about RM1,500 per tonne or about half the average CPO price of RM2,962 per tonne which the group realised for the quarter ended September 30 2008."The sharp decline in CPO prices and the current economic uncertainty are expected to adversely affect the performance of the plantation, property and motors divisions," it said.
For the first quarter, net profit to September 30 rose mainly because of higher palm oil prices.Operating profit from the industrial division was also up by 39 per cent, but profits from the property division fell by 30 per cent.
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