FGVH’s 1Q profit falls on tax, CPO prices

CEO says renewed focus on operational improvement to increase productivity is bearing fruit

by DASHVEENJIT KAUR / pic by TMR

FELDA Global Ventures Holdings Bhd (FGVH) reported a 21.9% decline in its net profit for the first quarter ended March 31, 2018 (1Q18), as a result of higher taxation of RM16 million and lower crude palm oil (CPO) prices.

FGVH’s earnings for the first three months of this year stood at RM1.33 million compared to the RM1.7 million that was reported in the previous corresponding quarter.

Known as the world’s largest CPO producer, FGVH also recorded lower revenue by 16.5% at RM3.6 billion, down from RM4.32 billion previously.

However, its profit before tax of RM26.22 million was a turnaround from the loss of RM32.26 million recorded a year ago, boosted by its sugar, and logistics and support business sectors.

In a filing to the local bourse, the plantation giant said the sugar sector recorded a profit of RM22.01 million in contrast with a loss of RM23.16 million a year ago.

The improvement is attributed to lower raw material costs, favourable foreign-exchange rate and reduction in administrative expenses by 33% quarter-on-quarter (QoQ).

The logistics and support business sector recorded a profit of RM25.36 million in the latest quarter, compared to a loss of RM39.5 million a year ago.

“This is mainly attributable to higher throughput in the bulking business and increased tonnage carried by the group’s transport operations,” FGVH said.

On the plantation sector, the profit fell 61.4% to RM18.29 million despite improved productivity and a higher sales volume.

“This is due to a lower average CPO price of RM2,472 per tonne compared to RM3,061 per tonne in 1Q17.

“The sector recorded a significant improvement in operational performance, with an 18.4% and 23% increase each in CPO and fresh fruit bunches (FFB) production respectively QoQ,” the statement read.

In a separate statement, FGVH’s group president and CEO Datuk Zakaria Arshad said the renewed focus on operational improvement to increase productivity is bearing fruit.

He added that FGVH will continue to push for greater productivity and cost efficiency in every sector.

“We expect to see this improving trend to continue, as we are already seeing the results of efforts in enhancing our performance.

“FGVH has recruited sufficient labour to meet its requirements and we have also been aggressively replanting to correct our age profile,” Zakaria said, adding that there is still much to do and the group is focused on delivering results.

Noting on the market challenges ahead, Zakaria said the board expects the results of 2018 to be satisfactory.

FGVH’s share price closed five sen, or 3.12%, higher to RM1.65 on some 3.69 million shares transacted.