The palm oil industry is constantly navigating complex waters, influenced by global commodity prices, environmental regulations, and operational challenges. Today, we delve into the latest financial performance of Rimbunan Sawit Berhad (RSB), a significant player in Malaysia’s palm oil sector, as they recently unveiled their First Quarter 2025 financial results. This report, though unaudited, reveals a remarkable turnaround in profitability compared to the previous year, yet highlights the evolving market dynamics and ongoing challenges.
The core takeaway? RSB has swung from a substantial loss to a profit before taxation, largely driven by stronger commodity prices. This positive shift in the first quarter of 2025 signals a resilient effort to capitalize on improved market conditions, offering a glimpse into the company’s strategic responses amidst the industry’s headwinds.
Q1 2025 Performance: A Striking Turnaround
Rimbunan Sawit Berhad’s first quarter of 2025 saw a significant improvement across key financial metrics when compared to the same period last year. This rebound underscores the company’s ability to leverage better market conditions for its products.
Year-on-Year Growth Highlights (Q1 2025 vs. Q1 2024)
Q1 2025
Revenue: RM156.3 million
Gross Profit: RM20.5 million
Profit Before Taxation: RM5.1 million
Profit After Taxation: RM2.2 million
Profit Attributable to Owners: RM0.7 million
Basic Earnings Per Share: 0.03 sen
Q1 2024
Revenue: RM93.3 million
Gross Profit: RM3.6 million
Loss Before Taxation: (RM9.6 million)
Loss After Taxation: (RM11.9 million)
Loss Attributable to Owners: (RM10.1 million)
Basic Earnings Per Share: (0.50) sen
The Group’s total revenue surged by an impressive 67.4%, reaching RM156.3 million from RM93.3 million in the corresponding period of 2024. This substantial increase was primarily fueled by a significant rise in the selling prices of its core products: Fresh Fruit Bunches (FFB) saw a 21.7% increase, Crude Palm Oil (CPO) jumped by 73.8%, and Palm Kernel (PK) rose by 23.4%. Additionally, sales volumes for CPO and PK were higher by 34.5% and 16.6% respectively.
This positive momentum translated into a dramatic 471.2% increase in gross profit, climbing from RM3.6 million to RM20.5 million. The most significant shift was the turnaround from a loss before taxation of RM9.6 million in Q1 2024 to a profit of RM5.1 million in Q1 2025, representing a 153.3% improvement. Similarly, profit after taxation swung from a loss of RM11.9 million to a profit of RM2.2 million, an improvement of 118.8%. Consequently, the profit attributable to the owners of the company also saw a positive reversal, moving from a loss of RM10.1 million to a profit of RM0.7 million.
Quarter-on-Quarter Snapshot: Navigating Shifting Tides
While the year-on-year performance shows a strong recovery, a look at the immediate preceding quarter (Q4 2024) offers a more nuanced picture of operational dynamics.
Quarter-on-Quarter Comparison (Q1 2025 vs. Q4 2024)
Q1 2025
Revenue: RM156.3 million
Gross Profit: RM20.5 million
Profit Before Taxation: RM5.1 million
Profit After Taxation: RM2.2 million
Profit Attributable to Owners: RM0.7 million
Q4 2024
Revenue: RM188.7 million
Gross Profit: RM20.5 million
Profit Before Taxation: RM1.9 million
Profit After Taxation: RM0.086 million
Profit Attributable to Owners: RM2.0 million
For the quarter ending March 31, 2025, RSB’s revenue of RM156.3 million reflected a 17.2% decrease from the RM188.7 million recorded in the previous quarter (Q4 2024). This dip was mainly attributed to a decline in the sales volume of FFB, CPO, and PK. Despite this, gross profit remained relatively stable, with only a marginal 0.3% reduction.
Interestingly, profit before taxation saw a significant 165.9% increase to RM5.1 million, and profit after taxation soared by 2,509.3% to RM2.2 million compared to the previous quarter. This dramatic improvement in overall profitability, despite lower revenue, suggests better cost management or a more favorable product mix. However, the profit attributable to the company’s owners experienced a substantial 65.4% decline, reaching RM0.7 million from RM2.0 million in the preceding quarter. This divergence indicates that while the Group’s total profit improved, a larger portion of this profit was attributable to non-controlling interests in Q1 2025 compared to Q4 2024.
Financial Health and Cash Flow Dynamics
RSB’s financial position remains largely stable. As at 31 March 2025, total assets stood at RM753.9 million, a slight increase from RM753.7 million at the end of 2024. Total equity also saw a modest increase to RM383.3 million from RM381.1 million, while total liabilities slightly decreased. The Net Assets Per Share remained consistent at RM0.19, indicating steady underlying value.
However, the cash flow statement presents a more dynamic picture. Net cash from operating activities turned negative at (RM2.9 million) for Q1 2025, a significant shift from the RM22.8 million generated in Q1 2024. This suggests a higher working capital requirement or changes in operational efficiency during the current quarter. Investing activities continued to show a net cash outflow of (RM10.7 million), primarily due to purchases of property, plant, and equipment, which was higher than the (RM7.9 million) outflow in the prior year’s same period.
Conversely, financing activities saw a positive turnaround, generating RM2.9 million in cash inflow, compared to an outflow of (RM17.5 million) in Q1 2024. This was influenced by changes in borrowings, including drawdowns and repayments of various loans. Overall, the net change in cash and cash equivalents for the quarter was a decrease of (RM10.7 million), leading to cash and cash equivalents at the end of the period of RM16.7 million, significantly higher than RM0.063 million at the end of Q1 2024, but a reduction from the beginning of the year.
Industry Outlook: Cautious Optimism Amidst Headwinds
Malaysia’s oil palm industry in 2025 is characterized by a blend of cautious optimism and persistent challenges. Rimbunan Sawit Berhad operates within this complex landscape, which will undoubtedly shape its future performance.
The positive outlook is supported by firm Crude Palm Oil (CPO) prices, expected to range between RM3,800 and RM4,300 per metric tonne. This, coupled with recovering global demand and modest production growth, provides a favorable commodity price environment for producers like RSB. However, the industry faces structural challenges that demand strategic responses. Labour shortages and ageing trees continue to impact production efficiency, while increasing compliance costs, particularly related to global sustainability regulations such as the European Union Deforestation Regulation (EUDR), add to the operational burden. Malaysian players are under pressure to adopt mechanisation, enhance traceability, and meet the Malaysian Sustainable Palm Oil (MSPO 2.0) standards to maintain market access, especially in key export markets.
RSB’s strategy, like many in the sector, is likely to involve a strategic shift towards downstream integration, biomass valorisation, and bioeconomy initiatives. These efforts aim to diversify revenue streams and reduce reliance on volatile commodity cycles. Concurrently, geopolitical factors such as ongoing tariff tensions between Malaysia and the USA could limit market access for downstream palm-based products and potentially deter foreign investment. This situation may prompt Malaysian producers to deepen trade ties with alternative markets while accelerating innovation in value-added palm derivatives to offset tariff impacts. To remain competitive, RSB must continue to focus on operational efficiency, stringent Environmental, Social, and Governance (ESG) compliance, and long-term value creation amidst both structural and geopolitical headwinds.
Summary and
Rimbunan Sawit Berhad’s First Quarter 2025 report showcases a commendable turnaround in profitability compared to the previous year, driven by favorable commodity prices and improved sales volumes for its key products. The company’s revenue and gross profit saw substantial increases, successfully reversing last year’s losses into a profit. While the quarter-on-quarter revenue saw a decline due to lower sales volumes, the significant increase in overall profit before and after taxation highlights underlying operational improvements. The balance sheet remains stable, though cash flow from operations turned negative, indicating areas for close monitoring.
However, the company, like the broader palm oil industry, faces significant challenges. These include:
- Commodity Price Volatility: While current CPO prices are firm, the industry remains susceptible to global supply-demand dynamics and geopolitical events.
- Regulatory Compliance and Sustainability: Increasing compliance costs, particularly related to the EU Deforestation Regulation and the need to meet MSPO 2.0 standards, require continuous investment and adaptation.
- Operational Constraints: Persistent labour shortages and the challenge of managing ageing palm trees can impact production efficiency and costs.
- Geopolitical Trade Tensions: The ongoing tariff disputes between Malaysia and the USA could affect market access for palm-based products, necessitating diversification of trade relationships.
- Contingent Liabilities: The company is involved in significant legal disputes, including a tax assessment of RM56.4 million for its subsidiary Timrest Sdn. Bhd. and a RM3.03 million lawsuit against R. H. Plantation Sdn. Bhd. While management believes they have strong arguable cases and no provisions have been made, these cases represent potential financial risks until resolved.
RSB’s strategic focus on operational efficiency, ESG compliance, and exploring downstream opportunities is crucial for long-term resilience. The company’s ability to navigate these complex factors will be key to sustaining its recent profitability gains.
This quarter’s report from Rimbunan Sawit Berhad paints a picture of a company regaining its footing in a challenging yet opportunistic market. The turnaround in profitability is certainly a positive sign, reflecting the benefits of a healthier commodity price environment and strategic adjustments.
However, the journey ahead for RSB, and indeed for the entire Malaysian palm oil sector, is far from smooth. The ongoing legal battles and the ever-present pressures of global trade policies and sustainability mandates mean that vigilance and adaptability will be paramount. Do you think RSB can maintain this positive momentum in the face of these structural and geopolitical headwinds? What aspects of their strategy do you believe will be most crucial for their continued success?
Share your thoughts and insights in the comments below. Let’s discuss how Malaysian retail investors should view companies like RSB in this dynamic environment.
