MARKET DEVELOPMENT
Low CPO Price Hits FGVH Quarterly Earnings
Low CPO Price Hits FGVH Quarterly Earnings
28/11/2013 (The Star) - Felda Global Ventures Holdings Bhd’s (FGVH) net profit slumped 88% to RM22.8mil in the third quarter ended Sept 30, from RM207.7mil previously, impacted by lower crude palm oil prices (CPO) and fair value changes in its land lease agreement liability.
Revenue slipped to RM3.22bil from RM3.77bil a year earlier.
Despite the drop in earnings, the company has proposed a higher interim dividend of six sen a share against 5 sen previously.
“Apart from the lower CPO prices, FGVH’s results were also impacted by a decrease in the contribution from its associate companies as a result of the lower margin achieved from the group’s milling and manufacturing businesses as well as the loss from its discontinued operations,” president and chief executive officer Mohd Emir Mavani Abdullah said in statement.
Nine-month net profit declined to RM482.3mil, or 13.2 sen a share, from RM588.2mil, or 23 sen a share, previously.
“Fortunately, our sugar and downstream businesses have performed significantly well for the nine-month period on a comparative year-on-year basis,” Mohd Emir said.
He said the group’s average CPO realised price for the nine-month period was RM2,303 per tonne, a 26% drop from last year’s corresponding period’s average of RM3,107 per tonne.
The group’s fresh fruit bunches (FFB) production increased 8.5% on a year-on-year basis to 3.76 million tonnes from 3.47 million tonnes in 2012 on the back of improved yield of 14.58 tonnes per hectare from 13.70 tonnes per hectare in the previous year.
CPO production also increased to 2.37 million tonnes from 2.33 million a year earlier.
“We are cognisant of the fact that cyclical conditions are part and parcel of the business landscape we operate in.
“Nevertheless, we are confident that the significant improvements in our operational efficiencies along with our assertive growth strategy will augur well for the Group,” said Mohd Emir.
He said the group had cleared 91.9% of the annual 15,000ha allocated for replanting in tandem with its commitment to improve future crop yield and extraction rates.
“With production of FFB reaching its cyclical peak in the coming months, increasing CPO inventory levels and the robust long-term fundamentals of the sector, we are positive on the outlook for the palm oil industry.
“The expectation is for palm oil demand to grow, supported by strong primary demand for edible oils, increasing the need for substitution to palm oil, as well as alternative uses such as oleochemicals, specialty fats and biodiesel.
“In this regard, the group is expected to benefit from the projected uptrend in CPO prices,” he said.
Revenue slipped to RM3.22bil from RM3.77bil a year earlier.
Despite the drop in earnings, the company has proposed a higher interim dividend of six sen a share against 5 sen previously.
“Apart from the lower CPO prices, FGVH’s results were also impacted by a decrease in the contribution from its associate companies as a result of the lower margin achieved from the group’s milling and manufacturing businesses as well as the loss from its discontinued operations,” president and chief executive officer Mohd Emir Mavani Abdullah said in statement.
Nine-month net profit declined to RM482.3mil, or 13.2 sen a share, from RM588.2mil, or 23 sen a share, previously.
“Fortunately, our sugar and downstream businesses have performed significantly well for the nine-month period on a comparative year-on-year basis,” Mohd Emir said.
He said the group’s average CPO realised price for the nine-month period was RM2,303 per tonne, a 26% drop from last year’s corresponding period’s average of RM3,107 per tonne.
The group’s fresh fruit bunches (FFB) production increased 8.5% on a year-on-year basis to 3.76 million tonnes from 3.47 million tonnes in 2012 on the back of improved yield of 14.58 tonnes per hectare from 13.70 tonnes per hectare in the previous year.
CPO production also increased to 2.37 million tonnes from 2.33 million a year earlier.
“We are cognisant of the fact that cyclical conditions are part and parcel of the business landscape we operate in.
“Nevertheless, we are confident that the significant improvements in our operational efficiencies along with our assertive growth strategy will augur well for the Group,” said Mohd Emir.
He said the group had cleared 91.9% of the annual 15,000ha allocated for replanting in tandem with its commitment to improve future crop yield and extraction rates.
“With production of FFB reaching its cyclical peak in the coming months, increasing CPO inventory levels and the robust long-term fundamentals of the sector, we are positive on the outlook for the palm oil industry.
“The expectation is for palm oil demand to grow, supported by strong primary demand for edible oils, increasing the need for substitution to palm oil, as well as alternative uses such as oleochemicals, specialty fats and biodiesel.
“In this regard, the group is expected to benefit from the projected uptrend in CPO prices,” he said.