The group posted a net profit of RM20.6m in 2Q20 versus a net loss of RM52.2m a year ago
by ASILA JALIL/ pic by RAZAK GHAZALI
FGV Holdings Bhd stated that its improved operational efficiency, higher crude palm oil (CPO) prices, normalised fresh fruit bunch (FFB) production and reduced losses at its sugar business enabled it to make a profit for the second quarter ended June 30, 2020 (2Q20).
The group posted a net profit of RM20.55 million in 2Q20 versus a net loss of RM52.2 million a year ago.
The CPO price averaged RM2,309 per metric tonne (MT) or 18% higher than the average CPO prices in 2Q19 of RM1,955 per MT.
Its revenue saw a marginal increase of 0.5% year-on-year (YoY) in the quarter to RM3.29 billion from RM3.28 billion in the previous corresponding quarter.
“Overall performance was affected by the Covid-19 pandemic despite the substantial improvement in its financial performance for the quarter,” FGV group CEO Datuk Haris Fadzilah Hassan (picture) said in Kuala Lumpur yesterday.
For the first half of the year (1H20), the group’s net loss widened to RM121.8 million as of June 30, 2020, against the RM55.57 million registered in the same period last year, while revenue slipped 7.3% YoY to RM6.08 billion for the six months versus RM6.56 billion in the previous corresponding period due to higher losses registered in the plantation sector as a result of lower sales volume.
The plantation sector registered a higher loss of RM104.98 million for the period compared to the RM14.28 million loss registered previously due to the decrease in CPO sales volume by 21.7%, in tandem with the lower FFB production by 13.8%.
Its sugar sector registered a lower loss of RM54.42 million versus RM56.03 million in the previous financial period, attributable to higher gross margin and lower finance cost related to loan modification of the Islamic term loan.
Meanwhile, the group’s logistics and other sectors registered a lower profit of RM22.62 million against RM26.7 million in the same period last year.
For 2H20, FGV expects CPO prices to trade in the range of RM2,400-RM2,600 per MT, which is lower than the current level, as it expects demand to slow down in 4Q20.
Haris said trades with China and India are the main drivers for the increase in price in 2Q20 which is also expected to flow into the 3Q20.
“We expect demand in 4Q20 will soften, bringing total pricing within more than moderated numbers than what we are seeing currently. We have seen it ranging between RM2,700 and RM2,800 per MT, but I believe this is not a sustainable price towards the end of the year,” he said in a press briefing yesterday.
The group estimates FFB production to range between 10.8 million and 10.9 million tonnes for 2H20.
Haris said the group’s foreign labour workforce stood at 96% of its total requirement as at the current quarter.
The constraint imposed by the government has forced FGV to reduce its dependence on foreign labour since the beginning of the year.
Haris said FGV is also planning to increase mechanisation opportunities with some 30,000ha set aside for the purpose.
He said the mechanisation process, which will be ongoing for the next three years, will reduce 10% of its foreign labour workforce which currently totals 32,000.