Sime Darby set to reap bumper harvest

MONROVIA (Liberia): Sime Darby Bhd is expected to perform better in the current financial year ending June 2011, thanks to buoyant crude palm oil (CPO) prices.

"We expect to harvest more oil this year. We are happy if it (CPO) continues to trade above RM3,000 per tonne," said Franki Anthony Dass, its executive vice-president in charge of plantations. The group will announce its third-quarter results on May 27.

Dass was speaking to visiting Malaysian reporters at Sime Darby's newly-set up Matambo estate here.

Yesterday, the third-month benchmark CPO futures on the Malaysian Derivatives Exchange rose RM63 to close at RM3,360 per tonne.

Sime Darby, which gets 56 per cent of its operating profits from the plantation business, is likely to enjoy fatter profits margin as CPO prices have been averaging at around RM3,300 per tonne since the start of the year. This is far higher than the six months to December 2010.

Despite bad weather in Malaysia and Indonesia, the group's plantation division achieved an average CPO price of RM2,692 a tonne against RM2,222 a tonne in the corresponding period last year.

In its last financial year ended June 2010, Sime Darby reported that its average CPO selling price was only RM2,311 per tonne. Last year, its fresh fruit bunches production was 9.87 million tonnes, while CPO output was 2.36 million tonnes.

The group owns 647,338ha of land in Malaysia and Indonesia, of which 81 per cent has already been planted. It will start planting 5,200ha with oil palms in Liberia next month. It has a 63-year concession until 2072 to plant some 200,000ha with oil palms and 20,000ha with rubber in the African nation.

Sime Darby is one of the world's largest plantation companies, producing some 6 per cent of the global CPO output.

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