Lower CPO sales volume, losses in sugar ops drag FGV's earnings in Q3
30/11/2022 (New Straits Times), Kuala Lumpur - FGV Holdings Bhd's net profit dipped 39.5 per cent to RM241.67 million in the third quarter (Q3) ended Sept 30, 2022 from RM399.39 million in the same quarter last year.
FGV said this was due to the losses incurred in sugar sector and lower sales volume of crude palm oil (CPO) and processed palm oil.
Still, group chief executive officer Datuk Nazrul Mansor said FGV was on course for a strong close this financial year.
He also noted that the outlook for Malaysia's plantation sector was expected to remain resilient in Q4, with a flat CPO production forecast of 18.3 million tonnes.
FGV's revenue rose 16.3 per cent to RM6.18 billion in Q3 versus RM5.32 billion previously on the back of higher average CPO price realised in the quarter under review.
Its upstream operations reported an increase in revenue to RM3.71 billion from RM3.24 billion during the same period last year.
Despite the higher margin achieved, CPO cost ex-mill increased by 39 per cent to RM2,262 per tonne due to lower fresh fruit bunch (FFB) production, increased manuring and labour costs as a result of the minimum wage implementation.
FGV's CPO production improved eight per cent to 801,000 tonnes driven by the increase of total FFB processed by 10 per cent to 3.93 million tonnes from 3.56 million tonnes a year ago.
Meanwhile, the group's downstream operations' operating profit grew to RM30 million, driven by the higher sales volume for packed products and oleochemicals under its subsidiaries, Delima Oil Products Sdn Bhd and Twin Rivers Technologies.
FGV's logistic sector generated an operating profit of RM34 million which represents a 36 per cent increase compared to the same period last year, mainly due to higher tonnage and throughput in its bulking and transport businesses.
However, the sugar sector reported a loss of RM71 million primarily due to a 20 per cent increase in production costs.
FGV said rhe sector suffered an erosion in margin mainly attributable to high input costs of raw sugar, freight, natural gas and the weakening of ringgit, despite the increase in overall average selling price.
For the nine-month period, the company's net profit rose 40.1 per cent to RM984.93 million from RM702.79 million in the corresponding period last year.
Its revenue increased 45.3 per cent to RM19.46 billion from RM13.39 billion a year ago.
Nazrul said its improved operating performance for the nine months was mainly attributed to higher palm products' margins due to higher CPO price realised and higher throughput and tonnage carried by the logistic sector.
He said the company was strengthening its position in the Malaysian food market, not only in essential food items such as cooking oil and sugar, but also building its presence in other value-added consumer food products segments.