FGV posts Q3 net loss of RM849m net loss, mainly due to APL impairments

The board is investigating six matters on FGV

KUALA LUMPUR: FGV Holdings Bhd posted net losses of RM849.25mil in the third quarter ended Sept 30, 2018,due to impairments totalling RM788mil, muchg of it was from the Asian Plantation Ltd (APL).

FGV, the world's largest crude palm oil (CPO) producer, announced on Wenesday the net losses were in contrast with the net profit of RM41.52mil a year ago.

Its loss before zakat and tax (LZBT) of RM911mil for Q3 included impairment amounting to RM788mil.

“LBZT before impairment came in at RM123mil, which compares to the profit before zakat and tax for the previous corresponding quarter was RM118mil,” it said.
 
FGV recorded a revenue of RM3.19bil compared to RM4.14bil a year ago. 

To recap, in 2014, FGV acquired APL for RM567.9mil via a voluntary conditional cash offer at 2.20 pound sterling per share, a premium of 294.7% over APL’s net asset value per share as at Dec 31, 2013.

“FGV also assumed APL’s borrowings amounting to RM517mil. Thus, the total cost to FGV was RM1.1bil,” it said.

Commenting on the group's plantation sector, it said that it “incurred a loss of RM849.8mil, a steep decline from a profit of RM132.4mil in the previous corresponding quarter. 

“The poorer performance is attributable to lower average CPO price realised, impairments of intangible assets of RM562mil and property, plant and equipment (PPE) of RM124mil. 

“The share of losses from JV companies was higher, amounting to RM60mil. These factors were compounded by weak margins in the R&D division and the lower sales volume of fertiliser,” it said.
 
FGV said the average CPO price realised was RM2,224 per tonne for the third quarter which was 16.5% lower than the RM2,665 a year ago.

Fesh fruit bunches (FFB) production fell by 12.2% at 1.08 million tonnes compared to 1.23 million tonnes a year ago.

The sector’s oil extraction rate (OER) improved to 20.89% from 19.78%. Ex-mill cost in 3QFY18 increased to RM1,777 per tonne from RM1,541 a year.

For the nine months ended Sept 30, 2018, FGV  registered FFB yields of 11.13 MT per hectare, similar to the previous corresponding nine months. 

For the nine months, it posted net losses of RM871.15mil compared with net profit of RM80.48mil in the previous corresponding period. Its revenue fell to RM10.23bil from RM12.66bil.