May 5, 2020 / 9:05 AM / 25 days ago

Malaysian palm giant Sime Darby warns of hit to supply chain amid prolonged pandemic

KUALA LUMPUR, May 5 (Reuters) - Malaysia’s Sime Darby Plantation, the world’s largest palm oil planter by land size, warned that a prolonged coronavirus pandemic would further disrupt the palm oil supply chain.

Malaysia on Monday eased restrictions on movement and businesses after a six-week partial lockdown that hurt the economy in the world’s second-largest palm producer, allowing most offices and restaurants to reopen.

Although the palm oil industry were exempted from the partial lockdown, Sime Darby in its annual report on Monday warned that some supply disruption may occur in the immediate aftermath of the pandemic.

“We foresee increasing challenges to our operations due to disruption in logistics arrangements and supply chain if the global pandemic prolongs,” group managing director Mohamad Helmy Othman Basha said.

“As the world’s economy showed signs of rapid deterioration, we should be cognisant that the domino effect of the upcoming recession is going to further impact the group’s value chain as well as global demand for crude palm oil and palm oil products,” he added.

Mohamad Helmy said the company’s business-to-business demand was hit during the lockdown, but consumer demand for cooking oil buoyed sales.

The company said global demand for the edible oil while had slowed in the near term due to the virus outbreak, food demand remains “fundamentally sound”.

Reporting by Mei Mei Chu; Editing by Louise Heavens

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