KUALA LUMPUR: Felda Global Ventures Holdings Bhd (FGV) posted net losses of RM65.54mil in the first quarter ended March 31, 2016 as its crude palm oil (CPO) production was severely impacted by the El Nino.This was in stark contrast with earnings of RM3.57mil a year ago.
FGV, the world's third largest oil palm company, reported on Tuesday that revenue was however higher at RM3.75bil compared with RM2.71bil a year ago. Loss per share was 1.8 sen compared with earnings per share of 0.1 sen.
“The group's fresh fruit bunches (FFB) production for Q1 2016 was adversely affected by the severe dry condition from the El Nino phenomenon. This industry-wide impact, though gradually reducing in severity, is expected to result in an overall reduction of the group?s plantation yield for the current year compared to 2015,” it said.
On the upside, CPO prices were on the rise since end 2015. This was due to declining palm oil supplies arising from the same El Nino phenomenon.
“Direction of CPO prices in the coming months is expected to be affected by the seasonally higher FFB production, the world's edible oil supply especially soy bean oil, crude oil prices, the Ringgit currency movement versus the US dollar, and global economic conditions.
“Notwithstanding this, expectations are for a higher average price of CPO and related products in 2016 compared to 2015. This higher average price is expected to cushion the impact of the lower yields,” it said.
Commenting on the performance, it said the palm upstream segment suffered a loss of RM100.55mil in 2016 on the back of weaker CPO production.
“CPO production declined by 14% to 484,000 tonnes in tandem with lower FFB production from 930,000 tonnes recorded in 2015 to 781,000 tonnes this year,” it said.
Average CPO price realised was RM2,303 per tonne compared to RM2,279 per MT last year whilst oil extraction rate (OER) achieved was at 20.56%, slightly higher compared to 20.50% achieved in the previous year.
As for its sugar segment, profit fell 27.8% mainly due to higher raw sugar costs despite higher sales volume for domestic and export market segments by 11% and 21% respectively.
The palm downstream segment made higher profit of RM1.80mil, which was in contrast with RM21.69mil losses in 2015 mainly due to higher sales volume in the US fatty acid business and higher margin achieved for RBDPKO and CPKO from kernel crushing activities. The result was however, partly affected by negative margin achieved from China?s bulk palm oil trading.
FGV's trading, marketing and logistics segment saw its profit rise 11.4% to RM17.77mil as a full quarter result and better performance for the trading company was included this year. The trading company commenced its operation in February last year.
Other businesses reported a loss of RM15.06mil compared to a profit of RM26.93 million last year as fertiliser and rubber business suffered from weak margins associated with the decrease in sales volume and price respectively.
FGV, the world's third largest oil palm company, reported on Tuesday that revenue was however higher at RM3.75bil compared with RM2.71bil a year ago. Loss per share was 1.8 sen compared with earnings per share of 0.1 sen.
“The group's fresh fruit bunches (FFB) production for Q1 2016 was adversely affected by the severe dry condition from the El Nino phenomenon. This industry-wide impact, though gradually reducing in severity, is expected to result in an overall reduction of the group?s plantation yield for the current year compared to 2015,” it said.
On the upside, CPO prices were on the rise since end 2015. This was due to declining palm oil supplies arising from the same El Nino phenomenon.
“Direction of CPO prices in the coming months is expected to be affected by the seasonally higher FFB production, the world's edible oil supply especially soy bean oil, crude oil prices, the Ringgit currency movement versus the US dollar, and global economic conditions.
“Notwithstanding this, expectations are for a higher average price of CPO and related products in 2016 compared to 2015. This higher average price is expected to cushion the impact of the lower yields,” it said.
Commenting on the performance, it said the palm upstream segment suffered a loss of RM100.55mil in 2016 on the back of weaker CPO production.
“CPO production declined by 14% to 484,000 tonnes in tandem with lower FFB production from 930,000 tonnes recorded in 2015 to 781,000 tonnes this year,” it said.
Average CPO price realised was RM2,303 per tonne compared to RM2,279 per MT last year whilst oil extraction rate (OER) achieved was at 20.56%, slightly higher compared to 20.50% achieved in the previous year.
“The increase in the fair value charge to RM89.72 million in 2016 compared to RM73.51 million in 2015 has also contributed to the decrease in the result from this segment. Excluding the land lease agreement (LLA) effect, the segment's profit reduced from RM71.94mil to a loss of RM10.83mil,” it said.
As for its sugar segment, profit fell 27.8% mainly due to higher raw sugar costs despite higher sales volume for domestic and export market segments by 11% and 21% respectively.
The palm downstream segment made higher profit of RM1.80mil, which was in contrast with RM21.69mil losses in 2015 mainly due to higher sales volume in the US fatty acid business and higher margin achieved for RBDPKO and CPKO from kernel crushing activities. The result was however, partly affected by negative margin achieved from China?s bulk palm oil trading.
FGV's trading, marketing and logistics segment saw its profit rise 11.4% to RM17.77mil as a full quarter result and better performance for the trading company was included this year. The trading company commenced its operation in February last year.
Other businesses reported a loss of RM15.06mil compared to a profit of RM26.93 million last year as fertiliser and rubber business suffered from weak margins associated with the decrease in sales volume and price respectively.
* See also FGV expects better results this year by being more efficient
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