FGV earnings soar in FY17

Zakaria: The plantation sector registered a significant improvement with a profit of RM554mil from RM234mil in the previous year.

Group gains from improved performance of plantation, logistics ops

KUALA LUMPUR: Felda Global Ventures Holdings Bhd’s (FGV) earnings jumped 356% to RM143.73mil in the financial year ended Dec 31, 2017 (FY17) from RM31.46mil in FY16.

The strong results were underpinned by improved performance from the plantation as well as logistics and other (LO) sectors.

The world’s largest producer of crude palm oil (CPO) said pre-tax profit increased by 60% to RM417mil from RM260mil previously.

“The plantation sector registered a significant improvement with a profit of RM554mil from RM234mil in the previous year,” group president and CEO Datuk Zakaria Arshad said in a filing with Bursa Malaysia.

The strong performance, he said, was due to higher fresh fruit bunches (FFB) production, better CPO sales margins and stronger performance from joint-venture companies.

However, it FY17 revenue slipped 1.6% to RM16.97bil from RM17.24bil a year ago.

Zakaria said FGV’s CPO production increased by 12% to 2.99 million tonnes in line with the growth in FFB production from 3.91 million tonnes in FY16 to 4.26 million tonnes in FY17.

Its average age profile improved from 14.9 years to 14.5 years.

As for the LO sector, he said its profit jumped to RM45mil from RM8mil mainly due to higher throughput in its bulking business and increased tonnage carried by the transport operations in tandem with the higher CPO production.

Its sugar sector posted a smaller profit in 2017 due to improved international raw sugar price and weakened ringgit compared to the previous year.

Zakaria pointed out that FGV’s strategic transformation plan for the plantation business had seen fruitful results.

“We are confident the momentum will continue this year, supported by sustainable growth in the LO sector and improvement by sugar sector,” he said.

For the year ahead, FGV expects to normalise its labour shortage by mid-2018. It will improve harvesting efficiency and is expected to increase this year’s FFB production by 9% to 4.85 million tonnes while reducing CPO production ex-mill cost per tonne to RM1,562.

“We will continue to grow our LO sector business capabilities to generate external opportunities for the group, including procuring new liquid and dry tankers and external business opportunities from various infrastructure projects.

“For the sugar sector, we have made progress through effective cost management, capital strengthening and rationalising of our operations.

“In addition, our new sugar refinery in Johor will begin operations in second-half 2018, which will increase our sugar refining capacity for export markets,” he said.

In the fourth quarter, its earnings fell 31.9% to RM76.57mil from RM112.45mil. Revenue fell at a slower pace of 16.9% to RM4.27bil from RM5.15bil.

Earnings per share were 2.1 sen compared with 3.1 sen.

Meanwhile, Bernama reported Zakaria as saying that the European Union’s (EU) plan to phase out palm oil-based biofuel from its energy mix starting 2021 will not affect FGV as its exports to the EU is minimal.

The EU Parliament voted on Jan 17, 2018 to ban palm oil-based biofuels by 2021, while other vegetable oil-based biofuels such as those from soya oil and rapeseed oil can continue to be used until 2030.

Asked whether FGV is also eyeing India’s ailing vegetable oil producer Ruchi Soya Industries Ltd, Zakaria replied, “As for now, Ruchi Soya is not in our target.” Yesterday, Sime Darby Plantation was reported to have expressed interest in the company, which has a 25% market share and a number of brands.

Zakaria revealed that FGV has two to three non-core businesses that would bring an additional income to the company this year.

“One of two are already concluded and these will give impact on this year’s financial results.”