29/08/2012 (Bernama) - Felda Global Ventures Holdings Bhd (FGVH) is bullish about its full year prospects despite recording a lower profit for the first six months in the current year compared with the previous year.

"We expect yields to improve in the coming months, and price (crude palm oil) to peak to RM3,300 (per tonne) by year end as compared to an average RM3,100 in the past six months, and strong demand especially from China and India," group president Datuk Sabri Ahmad told a press conference here, Tuesday.

"Most analysts have put a RM1.1 billion profit target for us and our target is to reach as close as possible to the target," he said.

For the half year financial period ended June 30, 2012, FGVH's profit after tax and non-controlling interest stood at RM381 million as compared to RM638 million for the same period in 2011.

Sabri said the lower profit was mainly due to the increase in cost of sales as well as the incurrence payment for land lease and 15 per cent profit sharing with the Federal Land Development Authority (Felda) as in the Land Lease Agreement (LLA) liability which amounted to RM140.5 million for the half year period.

However, FGVH's revenue surged 42 per cent to a new record of RM5.26 billion from RM3.7 billion in the previous year boosted by the sales of CPO by Felda Global Ventures Plantation Malaysia (FGVPM) beginning March 1, 2012.

"The revenue increase in the current global economic scenario and in the midst of lower commodity prices compared with last year is testimony to our well diversified portfolio and focused efforts to improve operational model," Sabri said.

"The decline in profit for the first half of the year is not reflective of any shortcomings in our businesses, rather it is a mixed result of cyclical upstream factors, market condition, commodity price volatility, higher cost of sales and change in business model."

In the first six months of 2012, FGVH incurred higher costs relating to replanting and manuring, primarily reflecting higher volume of fertilizer used as well as higher fertilizer price.

Some RM100 million has been spent towards replanting and FGVH targets to replant 15,000 hectares of estates each year.

There was also one-time incurrence of expenses related to FGVH's recent listing exercise amounting to RM40 million, Sabri said.