MARKET DEVELOPMENT
Sterling Growth for Felda Global Ventures Despite Low CPO Prices
Sterling Growth for Felda Global Ventures Despite Low CPO Prices
28/02/2014 (The Star) - Despite lower crude palm oil (CPO) prices, plantation giant Felda Global Ventures Holdings Bhd (FGV) posted a sterling 129.05% growth in net profit for the final quarter of last year to RM498.67mil from RM217.71mil a year earlier on fair value adjustments.
Sales, however, dipped 4.79% to RM3.67bil versus RM3.86bil in the same quarter of 2012, while earnings per share (EPS) rose to 13.7 sen against 7.7 sen.
The agribusiness firm announced a dividend per share of 10 sen for the quarter ended Dec 31, 2013, an improvement over the 8.5 sen distributed in the prior period and taking its full-year payout to 16 sen from 14 sen previously. This translates to a payout ratio of nearly 60% of net profit.
For the full year, FGV’s net profit soared 21.72% to RM980.99mil from RM805.95mil in 2012, but EPS fell to 26.9 sen versus 28.5 sen. Revenue also dropped 2.47% to RM12.57bil against RM12.89bil.
Its cash and near cash as at end-December stood at RM5.02bil compared with RM5.69bil the year before.
“Despite the challenging environment and pressure on CPO prices, we are glad to have delivered a final bottom line that was a significant improvement on a year-on-year basis,” president and chief executive officer Mohd Emir Mavani Abdullah said in a statement.
The group attributed the surge in its profit to a gain of RM328.33mil from the buyout of its associate Felda Holdings Bhd (FHB), which is now a wholly-owned unit, and a gain from fair value changes of a land lease agreement liability of RM494.48mil.
FGV said it realised an average CPO price of RM2,333 per tonne compared with RM2,843 per tonne in 2012, and an average fresh fruit bunch (FFB) price of RM448 per tonne against RM541 per tonne.
The group’s overall production of FFB from its plantations increased to 5.05 million tonnes last year from 4.91 million tonnes in 2012.
But CPO production fell to 3.21 million tonnes versus 3.28 million tonnes the year before.
Contribution from its associates also declined by 58.5% as a result of reduced margins achieved from FHB’s milling and manufacturing operations and the disposal of Tradewind (M) Bhd in February 2013.
FGV’s core plantation arm saw its segment results almost halve to RM686.87mil, on flat FFB yields, the notes to its accounts showed.
Its sugar arm was an outlier, with results improving 24.4% to RM388.78mil on the back of higher volumes, lower processing and purchasing costs of refined sugar, an unrealised gain on foreign exchange, lower borrowing costs, and softer raw sugar costs.
The reduction in its cost of sales resulted in better gross margins of 20.2%, compared to 16.3% for the previous year.
Meanwhile, FGV’s downstream unit sank further into the red with a loss of RM45.16mil from RM12.04mil due to negative margins.
The segment results of manufacturing, logistics and others also nearly halved to RM186.8mil on a decrease in research and development income, coupled with weaker fertiliser margins.
“Whilst the group’s performance was affected by lower average CPO prices, it managed to capture high potential mergers and acquisitions (M&As) in the plantation and downstream segments.
“These M&As will provide a gateway for its growth strategy and provide steady returns to the shareholders in the near future,” FGV said.
The palm oil industry is expected to see better days this year, it added, with CPO prices likely to range between RM2,500 and RM2,700 per tonne, which is an improvement over 2013’s average of RM2,371 per tonne.
Sales, however, dipped 4.79% to RM3.67bil versus RM3.86bil in the same quarter of 2012, while earnings per share (EPS) rose to 13.7 sen against 7.7 sen.
The agribusiness firm announced a dividend per share of 10 sen for the quarter ended Dec 31, 2013, an improvement over the 8.5 sen distributed in the prior period and taking its full-year payout to 16 sen from 14 sen previously. This translates to a payout ratio of nearly 60% of net profit.
For the full year, FGV’s net profit soared 21.72% to RM980.99mil from RM805.95mil in 2012, but EPS fell to 26.9 sen versus 28.5 sen. Revenue also dropped 2.47% to RM12.57bil against RM12.89bil.
Its cash and near cash as at end-December stood at RM5.02bil compared with RM5.69bil the year before.
“Despite the challenging environment and pressure on CPO prices, we are glad to have delivered a final bottom line that was a significant improvement on a year-on-year basis,” president and chief executive officer Mohd Emir Mavani Abdullah said in a statement.
The group attributed the surge in its profit to a gain of RM328.33mil from the buyout of its associate Felda Holdings Bhd (FHB), which is now a wholly-owned unit, and a gain from fair value changes of a land lease agreement liability of RM494.48mil.
FGV said it realised an average CPO price of RM2,333 per tonne compared with RM2,843 per tonne in 2012, and an average fresh fruit bunch (FFB) price of RM448 per tonne against RM541 per tonne.
The group’s overall production of FFB from its plantations increased to 5.05 million tonnes last year from 4.91 million tonnes in 2012.
But CPO production fell to 3.21 million tonnes versus 3.28 million tonnes the year before.
Contribution from its associates also declined by 58.5% as a result of reduced margins achieved from FHB’s milling and manufacturing operations and the disposal of Tradewind (M) Bhd in February 2013.
FGV’s core plantation arm saw its segment results almost halve to RM686.87mil, on flat FFB yields, the notes to its accounts showed.
Its sugar arm was an outlier, with results improving 24.4% to RM388.78mil on the back of higher volumes, lower processing and purchasing costs of refined sugar, an unrealised gain on foreign exchange, lower borrowing costs, and softer raw sugar costs.
The reduction in its cost of sales resulted in better gross margins of 20.2%, compared to 16.3% for the previous year.
Meanwhile, FGV’s downstream unit sank further into the red with a loss of RM45.16mil from RM12.04mil due to negative margins.
The segment results of manufacturing, logistics and others also nearly halved to RM186.8mil on a decrease in research and development income, coupled with weaker fertiliser margins.
“Whilst the group’s performance was affected by lower average CPO prices, it managed to capture high potential mergers and acquisitions (M&As) in the plantation and downstream segments.
“These M&As will provide a gateway for its growth strategy and provide steady returns to the shareholders in the near future,” FGV said.
The palm oil industry is expected to see better days this year, it added, with CPO prices likely to range between RM2,500 and RM2,700 per tonne, which is an improvement over 2013’s average of RM2,371 per tonne.