03/03/2025 (New Straits Times), Kuala Lumpur - FGV Holdings Bhd is gearing up for a promising year ahead after its net profit more than doubled in the financial year 2024 (FY24), with the company eyeing an even better profit margin in the first half of 2025 (1H25).

Group chief executive officer Fakhrunniam Othman said tightened supply and the festival-driven demand for palm oil are expected to keep crude palm oil (CPO) prices elevated, positioning the company for sustained growth.

"We are expecting margins to improve moving forward. In 1H25, we expect the average selling prices of crude palm oil (CPO) to range between RM4,300 and RM4,600 per tonne.

"Demand is also supported by festivals such as Ramadan, followed by the Hari Raya celebration," he told reporters during the FGV 2024 Financial Results Announcement recently.

Record profit for FY24 marks a strong comeback.

FGV's net profit more than doubled to RM276.25 million for the financial year ended Dec 31, 2024 (FY24) compared to RM101.62 million in FY23.

Its top-line growth remained resilient, with solid revenue of RM22.2 billion in FY24 compared to RM19.4 billion a year ago.

For the fourth quarter (Q4) ended Dec 31, 2024, FGV's net profit rose 65 per cent to RM116.21 million from RM70.44 million in the same period a year earlier.

The rise in net profit for the quarter was due to higher FFB prices as well as its sugar division's higher capacity utilisation.

Revenue for the quarter rose 10.4 per cent to RM5.92 billion in Q4 2024 versus RM5.36 billion last year.

FGV announced a final dividend payment of five sen per share, translating to a total dividend payout of RM182.41 million.

Fakhrunniam said 2024 had been challenging yet rewarding, proving FGV's resilience in an increasingly dynamic and regulated market.

"After a tough 2023, we have come back stronger, delivering solid results that reaffirm our position as a leading agribusiness player," said Fakhrunniam.

The company also registered an operating profit before fair value changes in land lease agreements and impairment of RM1.2 billion, representing an increase of 89 per cent from last year.

Strong Performance in the Plantation Division

The plantation division remained the key growth driver for FGV in FY24, with notable improvements in FFB yields and stronger margins on palm products.

It said this was underpinned by higher fresh fruit bunch (FFB) yield, stronger margins on palm products, supported by higher average CPO price realised at RM4,102 per tonne, compared to RM3,901 in FY23.

The division's growth momentum was further bolstered by a 24.9 per cent increase in the FFB price to RM932 per MT, coupled with a 10 per cent reduction in estate operational costs.

However, the oil extraction rate (OER) declined slightly to 20.7 percent from 21.1 percent in the same quarter last year.

The total FFB received was recorded at 3.52 million MT, with 1.06 million MT (30 percent) produced internally, 1.49 million MT (42 percent) sourced from FELDA settlers, and 0.96 million MT (28 percent) received from third parties.

Group chief financial officer Datuk Mohd Hairul Abdul Hamid anticipated FGV's FFB production to grow in 2025 compared to last year.

"Also, better productivity is expected to come from our estates, where costs per tonne are expected to be lower by some 5-8 per cent. This should lead to a better year this year," Mohd Hairul said.

The sugar division delivers impressive growth.

FGV's sugar division also made a significant contribution to the company's stellar financial performance in FY24. Despite a decrease in the average selling price of sugar, the division saw a 78.3 per cent year-on-year increase in operating profit, reaching RM96.76 million.

This growth was driven by higher sales volume and improved capacity utilisation across its sugar refining operations.

Commenting on the division's performance, Mohd Hairul stated that the sugar segment was one of the key contributors to FGV's overall success.

He also addressed concerns about the potential impact of government plans to reduce or remove subsidies for sugar producers, which may affect FGV's subsidiary, MSM Malaysia Holdings Bhd.

"This will bring no impact to the company, as the government will be implementing options like a price float or a revised controlled price ceiling before eliminating the subsidies," Mohd Hairul explained.

Currently, the sugar industry continues to receive a RM1 per kilogram incentive for both coarse grain and fine sugar, which has been in place since November 2023. MSM is entitled to 24,000 tonnes per month under this arrangement.

Strategic outlook for FY25

Despite the volatility in global markets, FGV's ability to deliver strong financial results in FY24 is a testament to its strategic resilience and operational excellence.

The company anticipates further growth in FY25, with continued improvements expected in FFB production and cost efficiency.

"As we chart our course for 2025, Business Plan 2024-2026 (BP26) remains our compass, enabling us to capture emerging opportunities, mitigate risks, and drive sustainable growth.

"We are committed to creating long-term value for our stakeholders and shareholders while upholding the highest standards of responsibility and innovation," Fakhrunniam added.

FGV said its successes in FY24 were anchored in the strategic execution of its BP26, a comprehensive framework designed to navigate a dynamic and disruptive market.

Central to BP26 are its four strategic thrusts: operational improvement, product and market penetration, new growth areas, and financial and capability building, which provides a solid foundation for delivering long-term stakeholder value, it said.

https://www.nst.com.my/business/corporate/2025/03/1182833/fgv-holdings-net-profit-more-doubles