FGV posts 10.4% increase net profit in 2Q on higher palm products’ margins 

by SHAFIQQUL ALIFF / TMRpic

FGV Holdings Bhd’s net profit for the second quarter of 2022 (2Q22) which ended on June 30, 2022, rose by 10.4% to RM374.02 million compared to the previous year at RM338.82 million, due to higher palm products margins as a result of firmer crude palm oil (CPO) prices.

In a filing to Bursa Malaysia, the group’s revenue jumped by 58.8% to RM7.42 billion on the back of a higher average CPO price realised in the current quarter which was higher by 58% reaching RM5,165 per metric tonne (MT), compared to RM3,268 per MT in the first half of 2021.

The plantation giant said the profit for its plantation sector increased 31.41% to RM620.82 million in 2Q22 from RM472.42 a year ago on the back of a higher average CPO price realised of RM5,254 per MT compared to RM3,333 per MT in 2Q21 in addition to better margins in the downstream business.

FGV stated that it recognised a fair value charge on land and lease agreement (LLA) of RM57.85 million in 2Q22 compared to a fair value gain of RM180.35 million in 2Q21 resulting from the revision in the yield assumption used in arriving at the LLA liability.

“Without this, the sector registered a significantly higher profit of RM678.67 million in the current quarter compared to RM292.07 million registered in the previous year.

“Operationally, fresh fruit bunch (FFB) production reduced to 0.96 million MT from 1.06 million MT, while yield decreased to 3.5 MT per ha in the current quarter. Oil extraction rate achieved in the current quarter was 20.63%, improved from 20.16% registered in the corresponding quarter of the previous year,” the group added.

Meanwhile, FGV’s sugar sector reported a loss of RM28.88 million compared to an RM23.05 million profit in the corresponding quarter of the previous year.

This was due to the high input costs mainly for raw sugar, freight and natural gas, and the weakening of the ringgit despite the increase in the overall average selling price in 2Q22.

Its logistic and other sectors reported a lower profit of RM14.02 million compared to RM20.14 million reported a year ago mainly attributable to impairment loss on receivables recognised in other sectors of RM7.13 million.

The logistic division reported an increase in profit by 14% compared to 2Q21 mainly due to an increase in handling rate despite lower throughput in tandem with lower FFB production reported in the plantation sector in the current quarter.

FGV group CEO Datuk Mohd Nazrul Izam Mansor (picture) said the company is certainly on track to chart its growth trajectory and will remain cautiously optimistic towards achieving 2022 targets and the group’s aspiration to become the world’s leading integrated and sustainable agribusiness.

“Our sustainability agenda remains at the forefront of our effort towards creating value for our stakeholders.

“The core priority which encapsulates all of our forward-moving plans is to champion sustainability through the clear environment, social and governance frameworks as enunciated in FGV’s Group Sustainability Framework to drive positive impacts for our stakeholders and to lead as a responsible global corporate citizen,” said Mohd Nazrul.

The group also stated that they recently collaborated with Padiberas Nasional Bhd to produce a new formulation of the native chicken feed brand, Alma, that uses by-products from local paddy and rice factories to strengthen the National Food Security Agenda.