Felcra dividend for 2018 halved on CPO price slump

The corporate entity under KPLB yesterday declared a total dividend of RM111.5m for 2018, a 64% decline against RM306.9m in 2017


FELCRA Bhd reduces its dividend payout by more than half on weaker profits, as a result of the slump in crude palm oil (CPO) prices last year.

The corporate entity under the Rural Development Ministry (KPLB) yesterday declared a total dividend of RM111.51 million for 2018, derived from 404 successful projects. The amount represents a 64% decline against RM306.94 million distributed in 2017 from 880 profitable projects.

In total, Felcra has 1,449 consolidation and rehabilitation projects nationwide.

Felcra CEO Mohd Nazrul Izam Mansor said the drop in the number of distributions due to the sharp decline in palm prices which fell to an average of RM458 per metric tonne (MT) in 2018 compared to RM602/MT in 2017 — a reduction of RM144/MT or 23%.

Global CPO prices were also down by RM563/MT or 20% to an average of RM2,237/MT in 2018 compared to RM2,800/MT in 2017.

“Although the commodity industry is facing a massive downturn in the global market, Felcra is still working to ensure that the average productivity of the farms is always

at the optimum level, in order to compensate for the fall in commodity prices,” Mohd Nazrul Izam said in a statement yesterday.

He said the overall distributable profit of RM111.51 million for 2018 comprises RM36.16 million paid during the first interim, RM24.32 million in the second interim, and a final payment of RM18.04 million which benefitted 37,866 participants.

The total figure also includes a distribution of RM32.98 million which is paid out to selected projects on a monthly basis. The distribution of the final payment will be made in stages effective immediately.

The fall in CPO prices has not shown any promising signs of recovery despite the drawdown in CPO stocks. Malaysia’s key export is currently hovering at its lowest level this year. Price for June delivery has settled at RM1,983 on the Bursa Malaysia Derivatives Exchange market.

In a recently published report, Maybank Investment Bank Research expects local planters to see continued earnings pressure given the weak CPO average selling prices.

“Given that the present spot CPO price is just a tad above cost, we expect a substantial decline in earnings in the first quarter for most companies,” the report stated.

However, it said the sharper reduction in CPO stocks in Malaysia for April is likely to be supportive of prices amid concerns of lower soybean oil prices and the escalating US-China trade tensions.