FGV returns to the black with RM2.47 million net profit in Q1

PETALING JAYA: Felda Global Ventures Holdings Bhd (FGV) swung to the black with a net profit of RM2.47 million for the first quarter (Q1) ended March 31, 2017 against a net loss of RM81.08 million in the previous year’s corresponding period, underpinned by higher crude palm oil (CPO) prices.

Revenue expanded 15.1% to RM4.32 billion from RM3.76 billion.

In a filing with the stock exchange, FGV attributed the turnaround of the palm upstream segment to higher average CPO price realised of RM3,061 per tonne compared to RM2,303 per tonne last year.

Its CPO production increased 16% from 485,000 tonnes in Q1 2016 to 566,000 tonnes in Q1 2017 in tandem with higher fresh fruit bunch (FFB) production from 780,000 tonnes to 800,000 tonnes.

However, its oil extraction rate (OER) was lower at 19.82% compared with 20.56% in the previous year due to heavy rainfall recorded.

FGV CEO Datuk Zakaria Arshad said the groups expects average CPO price to decline slightly with the increase in FFB output from both Malaysia and Indonesia in the coming months.

Nonetheless, Malaysia’s overall production this year is estimated to be lower than 2015, in view of acute labour shortages that could moderate the bearish CPO price outlook.

“FGV remains focused on further augmenting its core business and operational efficiency in line with our SP20 (Strategic Plan 2020) target. We expect average CPO price to be around RM2,550 to RM2,750 per metric ton for the second half 2017,” he noted.

On the downstream business, Zakaria said FGV will continue to develop key destination markets such as India, China and the Middle East and North Africa. “We will always be receptive to any strategic partnership proposal that is commercially synergistic and value accretive to our shareholders.”

As for the sugar sector, he noted that the group continues to engage with the government and update them on the volatility of the global sugar commodity market and is hopeful of a favourable outcome.