KUALA LUMPUR: Hap Seng Plantations Holdings Bhd is expecting its financial performance in 2022 to be influenced by the current high crude palm oil (CPO) prices, exacerbated by lower production, weather and labour issues.

       In a filing with Bursa Malaysia, the group pointed out that Malaysian palm oil inventories decreased by 3.9% month-on-month to 1.552 million tonnes at end-January 2022 (from 1.615 million tonnes at end-December 2021) in tandem with the lower production.

       “The global supplies of edible oils remain tight due to lower-than-expected production which have pushed edible oils prices to an unprecedented high,” said the group.

       The monthly average CPO price was at its highest at RM5,354 per tonne in January and daily CPO price up to Feb 18, reached a record high of RM6,027 per tonne, supported by demand from India with the reduction by the Indian government on its agriculture infrastructure and development tax on CPO from 7.5% to 5% with effect from Feb 13, 2022 to help its domestic palm oil refiners and consumers.

       Meanwhile, the Indonesian government’s new domestic market obligation policy on palm oil exports implemented on Jan 27 to control the domestic supply of vegetable oils and their prices, requires exporters of palm oil products to sell 20% of their planned total export volume domestically. This will further reduce Indonesian CPO exports and boost demand for Malaysia’s CPO.

       Also, palm oil industry analysts expected current CPO prices to be supported in the short-term in view of the low palm oil production season in the first quarter of 2022.

       In addition, the severe drought in South America affecting harvest and river transportation of its major summer crops of corn and soybeans will impact global supply of edible oils and push up prices.

       “The group expects its results for the financial year ending Dec 31, 2022 (FY22) to be influenced by movements in commodities prices and uncertainties in the global economies caused by the prolonged Covid-19 pandemic and effectiveness of global containment measures,” the group said.

       For its fourth quarter ended Dec 31, 2021 (Q4’21), the group posted a 155% year-on-year jump in net profit to RM94.3mil while revenue was 27% higher to RM194.8mil, due to higher average selling prices realisation of CPO and palm kernel (PK) albeit with lower sales volume for both products.

       The average selling prices per tonne of CPO and PK for Q4’21 were significantly higher at RM5,103 and RM3,762 respectively, compared with RM3,148 for CPO and RM2,027 for PK a year earlier. CPO sales volume for Q4’21 at 30,972 tonnes was 26% lower year-on-year while PK sales volume was 10% lower at 8,430 tonnes, mainly due to lower CPO and PK production and timing of deliveries.The production of CPO and PK for Q4’21 was lower year-on-year by 6% and 8% respectively due to lower fresh fruit bunch (FFB) production and lower FFB purchased, mitigated by the higher CPO and PK extraction rates. FFB production for Q4’21 was 7% lower year-on-year as it was affected by the seasonal yield trend and cropping patterns.

       For FY21, the group’s net profit jumped 148% year-on-year to RM224mil while revenue was 43% higher to RM670.85mil, mainly due to significantly higher average selling prices for CPO and PK. Earnings per share for FY21 were significantly higher at 28.01 sen compared with 11.29 sen in FY20.

       The group declared a second interim dividend of 15.5 sen per share, with the ex-date on March 9, and payment on March 23.