FGV declares three sen dividend as 4Q net profit rises 88% on higher commodity price
26.02.2021 (www.theedgemarkets.com) - KUALA LUMPUR (Feb 26): Plantation giant FGV Holdings Bhd saw its net profit for the fourth quarter ended Dec 31, 2020 (4QFY20) increase by 87.9% year-on-year (y-o-y) to RM134.93 million from RM71.81 million for 4QFY19.
In a bourse filing, FGV explained that the higher net profit was mainly driven by its plantation segment, which saw higher crude palm oil (CPO) prices.
The planter also declared a dividend of three sen per share for 4QFY20. It did not declare any dividend for 4QFY19. For FY20, its cumulative dividend stands at three sen — after declaring no dividend for FY19.
At the same time, its latest quarterly revenue was up 27.09% y-o-y at RM4.01 billion from RM3.15 billion a year prior.
Net profit declined by 1.44% quarter-on-quarter (q-o-q) to RM134.93 million from RM136.89 million for the immediate preceding quarter. Quarterly revenue for 4QFY20 increased by 0.5% q-o-q to RM4.01 billion from RM3.99 billion for 3QFY20.
On a full-year basis, the group swung back into the black in FY20, posting a net profit of RM150.02 million from a net loss of RM246.17 million for FY19. Full-year revenue increased by 6.2% y-o-y to RM14.08 billion from RM13.26 billion for the previous financial year.
In a separate statement, FGV said that average CPO prices in 4QFY20 were higher at RM3,059 a tonne from RM2,159 per tonne in 4QFY19.
FGV chief executive officer (CEO) Datuk Haris Fadzilah Hassan said that this was the highest positive financial performance the planter had achieved in five years despite the various challenges faced by it and the industry as a whole in 2020.
“The [Covid-19] pandemic outbreak affected domestic and global demand, and was further aggravated by disruption to upstream activities, such as harvesting and collecting fresh fruit bunches (FFB), due to the movement control order (FGV),” he noted.
Haris Fadzilah added that for 2021, it is allocating 75,000 tonnes from its palm kernel expeller (PKE) production as animal feed for local consumption, equivalent to almost 20% of its total PKE production. It has established its distributorship network through Peninsular Malaysia to ensure supply reaches local farmers effectively.
It also expects to launch six new product variants for its consumer product range this year.
Haris Fadzilah also noted that the Roundtable on Sustainable Palm Oil (RSPO) is currently conducting its verification audits to assess FGV’s progress in implementing the RSPO’s Complaints Panel directives.
He said six sites had been selected and the RSPO appointed auditor had conducted verification at four complexes in Peninsular Malaysia. The two remaining audits are scheduled to take place in March to April 2021, subject to the lifting of travel restrictions due to Covid-19.
As for the withhold release order (WRO) by the US Customs and Border Protection (CBP), FGV said that it is taking a systemic approach in ensuring the rights of workers are respected and protected, thereby eliminating practices that may be indicative of labour exploitation. It said that it will revisit the appointment of an independent audit firm for an audit of operations within a reasonable period of time, and will continue to engage with the CBP accordingly after appointing an independent auditor
“FGV anticipates 2021 to be another eventful year on the back of challenges in labour supply and volatility of CPO prices in our plantation business.
"Our sugar business will continue to improve its operating and financial performance. However, the group remains on course with its strategies to reposition FGV to be the leading agribusiness player to create value in its downstream business,” added Haris Fadzilah.
At the noon market close today, shares in FGV were down 1.48% or two sen at RM1.33, valuing it at RM4.85 billion. It saw 2.23 million shares done.