KUALA LUMPUR, May 28 — FGV Holdings Bhd slipped into the red in the first quarter ended March 31, 2024 (1Q FY2024), with a net loss of RM13.49 million, compared with a net profit of RM12.09 million a year ago, primarily attributed to losses in the plantation division.
Revenue dropped to RM4.54 billion from RM4.59 billion on the back of lower average crude palm oil (CPO) price realised of RM3,907 per tonne in the current quarter, it said in a filing with Bursa Malaysia today.
According to FGV, one of the world’s largest CPO producers, its plantation division registered a loss of RM62.14 million in 1Q FY2024 compared to a profit of RM58.32 million in the same quarter last year.
It attributed the decline mainly to a significant increase in the fair value charge on land lease agreements (LLA), which surged to RM86.04 million from RM32.16 million in 1Q FY2023.
FGV said excluding the fair value charge on LLA, the division reported a lower profit of RM23.90 million from RM49.64 million in the preceding quarter.
It said this was due to a 30 per cent reduction in fresh fruit bunches (FFB) production which fell to 740,000 tonnes from 1.05 million tonnes.
“This resulted in a decrease in yield to 2.88 tonnes per hectare (ha) from 3.91 tonnes per ha in the preceding quarter and higher estate operational cost by 13 per cent.
“Additionally, the oil extraction rate (OER) achieved in the current quarter was lower by 20.59 per cent from 21.07 per cent registered in the preceding quarter,” it said.
FGV said the decline in profit was partially mitigated by enhanced performance in the sugar and oils and fats divisions during the current quarter.
On its sugar division, it said following the rectification work at the MSM Johor refinery, the division is expected to increase its utilisation factor by more than 50 per cent.
“This improvement will reduce production costs and enhance the overall profitability of the division, and the rectification will also enable the division to meet growing demand and strengthen its position in the export market,” it said.
Moving forward, FGV expects the CPO price range for 2024 to be between RM3,800 and RM4,000 per tonne, as a potential shift to the La Nina weather phenomenon in the latter part of the year could lead to production shortfalls.
However, it said palm oil industry players anticipate CPO prices to remain above RM3,800 per tonne in the first half of 2024, before easing as seasonal output recovers.
“The group expects satisfactory performance in the financial year 2024, in line with the projected CPO price movement,” FGV said. — Bernama