Palm oil giant Sime Darby Berhad, under pressure from a cost overruns probe, said today its first quarter profits slid due to weakness in its plantations and energy divisions.

The world's largest listed palm oil producer said in a filing with the local bourse it made a net profit of RM654.7 million (US$206.9 million) for the three months ended Sept 30, a 4.37 percent drop from RM684.6 million a year earlier.

However, the company said its revenue for the quarter had risen to RM8.78 billion from RM7.74 billion a year earlier.

"This quarter has been challenging as we have worked with great effort to restore our stakeholders' trust and strengthen performance in all divisions," Sime Darby acting president and group chief executive Mohammad Bakke Salleh said in a statement, alluding to controversy over the firm's cost overruns.

NONE The Malaysian Anti-Corruption Commission is investigating the company after its energy and utilities division declared RM2.09 billion in cost overruns and provisions in the group's last annual results.

The drop in quarterly profits follows an August announcement by the state-controlled palm-oil-to-property conglomerate that its full year net profits for 2009 slumped to RM726.8 million from RM2.28 billion the previous year.

"Contribution from plantation dropped by 22 percent mainly due to the lower production of fresh fruit bunches and lower oil extraction rate, coupled with lower contribution from downstream operations," it said in its filing.

It said fresh fruit bunch production slipped 6.0 percent to 2.57 million metric tons, with its Indonesian production falling 12.0 percent compared to a year earlier.

The company's energy and utilities division also saw a 50.0 percent decrease in pretax profit as a result of lower fabrication and engineering activities.

The company said this month it would sue several individuals over the massive cost overruns it has suffered.

The huge overruns involved several major projects including the controversial Bakun hydroelectric dam on Borneo island in eastern Malaysia, and oil works in Qatar.

- AFP