FGV posts profit in Q3

PETALING JAYA: Felda Global Ventures Holdings Bhd (FGV), which FGV returned to the black for the third quarter ended Sept 30, 2017, foresees slightly lower crude palm oil (CPO) prices of between RM2,500 and RM2,700 per tonne moving into the first half of 2018.
This is due to market competition from rival soybean oil and the recovery in production for oil palm plantations, said group president and CEO Datuk Zakaria Arshad at a media briefing today in conjunction with the release of FGV’s third-quarter results. It was his first press conference after his return from a more than four month long leave of absence.
For the fourth quarter of 2017, CPO prices are projected to be in the range of RM2,600 to RM2,800 per tonne.
FGV reported a net profit of RM38.77 million for the third quarter against a net loss of RM73.61 million in the previous corresponding period, driven by lower cost of sales and operating expenses. Its revenue for the quarter declined 1% to RM4.15 billion from RM4.19 billion a year ago.
The group has proposed an interim dividend of 5 sen per share for the quarter under review.
For the first nine months of the year, FGV registered a net profit of RM67.15 million versus a net loss of RM80.99 million in the same period last year. Revenue came in at RM12.7 billion, 5% higher than the RM12.09 billion it made a year ago.
FGV’s plantation profit surged to RM255.13 million for the financial period ended Sept 30, 2017 from a loss of RM30.41 million in the previous year, due to higher crude palm oil (CPO) sales margin on the back of higher average CPO price realised of RM2,820 per tonne compared with RM2,458 per tonne in 2016.
On India’s recent move to lift import tax on CPO from 15% to 30%, Zakaria believes it will only have a short-term impact as India is expected to eventually look for cheaper oil. FGV’s CPO exports to India account for 10% to 12% of the group’s total production.
Nonetheless, FGV told Bursa Malaysia today that it had terminated the memorandum of understanding (MoU) with Trimex Industries Private Ltd for the purpose of exploring the possibility of supplying and distributing FGV’s palm oil to the Indian market.
Commenting on the long outstanding debts of US$8.3 million (RM35.4 million) owed by SafitexTrading LLC, Zakaria said the group is striving to recover all the sum owed to FGV, but no timeline has been set for the matter.
Zakaria said FGV has registered 13% take-up of its voluntary separation scheme (VSS), which was extended to 236 senior managers, as part of its manpower optimisation and frugal cost management exercise. FGV’s target is to achieve 15% take-up and those who stay will also see a 15% cut in allowances.
“The first stage is for senior management, now the second stage is ongoing, we try to reduce the number of staff in rubber, engineering and property segments.”
Zakaria said the group is in talks to acquire greenfield land, preferably in Kalimantan, Indonesia.
On the likelihood of La Nina, which will bring heavy rainfall, FGV plantation sector COO S. Palaniappan said the group does not expect a significant impact and it will not be as severe as El Nino.
By year-end, eight of FGV mills will be RSPO-certified and it is on track to have RSPO certification for all of its mills by 2020.
FGV’s share price closed 5 sen or 2.8% higher at RM1.84 today, with some 4.15 million shares changing hands.