FGV group CEO Datuk Haris Fadzilah Hassan said:
KUALA LUMPUR: FGV Holdings Bhd
reported net loss of RM3.37mil in the first quarter ended March 31, 2019 compared with a net profit of RM1.12mil a yerar ago largely due to a sharp decline in crude palm oil (CPO) prices, and lower average selling price in the sugar sector.
FGV, the world's largest CPO producer, announced on Wednesday profit before interest and tax (PBIT) of RM78mil was a 19% decline from RM96mil a year ago.
Revenue fell by 9% to RM3.27bil from RM3.60bil a year ago largely due to a sharp decline in CPO prices and lower average selling price in the sugar sector.
During the quarter, CPO prices averaged RM 1,986 per metric tonne (MT), or 20% lower than the RM2,472 a year ago.
“Despite the sharp drop in prices, revenue did not decline in tandem, mainly because of improved operational performance and lower costs,” it said.
FGV group CEO Datuk Haris Fadzilah Hassan said the plantation operations had been focused on tightening procurement processes involving capital and operating expenditures and implementing new tasking systems and processes for infield workers.
“These efforts are starting to bear fruit,” he said. “Additionally, several other estate and milling transformation initiatives have started delivering results.”
Haris the plantation sector recorded a profit before zakat and tax (PBZT) of RM40mil, up from RM19mil a year ago. This was achieved on the back of a 6% increase in fresh fruit bunch (FFB) production to 1.05 million MT, from 991,000 MT in 1Q2018.
FFB yield increased to 4.38 MT/ha, up by 11% from the 3.96 MT/ha a year ago.
CPO oil extraction rate (OER) improved by 20.76% from 19.75%, and thus, total CPO production increased 14% to 762,000 MT, compared to 670,000 MT previously.
Improved production volumes combined with enhanced operational effectiveness and efficiencies, resulted in lower ex-mill costs in 1Q2019 of RM 1,378 per tonne, 20% lower than RM 1,728 in 1Q2018.
“Additionally, the sector’s improved performance is also attributable to a net reversal of impairments of receivables amounting to RM48mil,” he said.
The group’s downstream business exceeded internal sales targets, primarily due to the implementation of the B10 biodiesel mandate which came into effect in February 2019. As for the palm kernel processing business recorded a higher margin.
“We are strategically reviewing our downstream businesses and believe that they will continue to grow and contribute positively to FGV’s performance,” Haris said.
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