Fakhrunniam (left) together with Mohd Hairul at the FGV Holdings Bhd 2024 Financial Results announcement. — ART CHEN/The Star
KUALA LUMPUR: FGV Holdings Bhd expects stronger margins in the coming financial year 2025 (FY25 ending Dec 31).
This will help support its performance moving forward to deliver greater returns to shareholders after reporting stronger FY24 results.
“We are expecting margins to improve moving forward. In the first half of the year we expect the average selling prices of crude palm oil (CPO) to range between RM4,300 to RM4,600 per tonne,” said its group chief financial officer Datuk Mohd Hairul Abdul Hamid at its FY24 results briefing yesterday.
“Also better productivity is expected to come from our estates where costs by per tonne basis is expected to be lower by some 5-8%. This should lead to a better year this year,” he added.
FGV’s shares closed near its one-month high yesterday at RM1.14 per share with a total market capitalisation of RM4.16bil.
FGV said CPO prices in the first half of the year will be supported by tight supply of fresh fruit bunches production; while demand is strong on the various festivities of Hari Raya and during the Ramadan fasting month.
In its FY24, the group reported a strong bottomline growth that was supported by its plantations and sugar divisions.
The group saw its net profits surging to RM276mil which represents a substantial 171% increase from RM102mil in the previous financial year.
Its top-line growth remained resilient, with solid revenue of RM22.2bil compared to RM19.4bil in the FY23.
It declared a final dividend of 5 sen per share following its results announcement.
FGV also registered an operating profit before fair value changes in land lease agreement (LLA) and impairment of RM1.2bil, representing an increase of 89% from last year.
The group said its plantation division was its primary growth driver which had contributed significantly to its overall performance.
This was underpinned by higher FFB yields, stronger margins on palm products, supported by higher average CPO price realised at RM4,102 per tonne, compared to RM3,901 per tonne in the FY23.
It noted its sugar division was also a strong contributor to its overall performance through higher sales volume and increased contributions.
Profits before zakat and taxation rose to RM566mil from RM336mil, with all divisions reporting improvements, while the oils and fats division continued to navigate a competitive market environment.
Meanwhile, FGV’s group chief executive officer Fakhrunniam Othman said some form of switching to alternative oils are bound to happen with the higher CPO prices but he also noted the price premiums between CPO and competing seed oils have narrowed in recent times.
“The core demand has not changed. If CPO prices is at around RM4,000 to RM4,200 per tonne, the demand will still be strong. While on the supply side, it is not envisaged to increase that drastically neither in Malaysia nor Indonesia indicative of (some) supply tightness,” Fakhrunniam said.
CPO prices are also expected to remain elevated in the first half of 2025 on seasonally lower FFB output and Indonesia’s biodiesel mandate, FGV said.
“2024 has been challenging yet rewarding, proving FGV’s resilience in an increasingly dynamic and regulated market.
“CPO prices fluctuated due to global supply-demand shifts and geopolitical tensions, while stricter certification and sustainability standards like the Roundtable on Sustainable Palm Oil (RSPO) and European Union Deforestation Regulation (EUDR), pushes us to raise the bar. After a tough 2023, we’ve come back stronger, delivering solid results that reaffirm our position as a leading agribusiness player,” Fakhrunniam added.
FGV said its plantation division aims to achieve yield and oil extraction rate targets, while its sugar division is expected to strengthen its market presence and engage with the government on a sustainable pricing mechanism.
Its logistics and support division would focus on capacity enhancement, cost optimisation and network expansion.
“FGV’s ability to deliver strong results despite market volatility is a testament to our strategic resilience and operational excellence. As we chart our course for 2025, Business Plan 2024-2026 (BP26) remains our compass, enabling us to capture emerging opportunities, mitigate risks, and drive sustainable growth. We are committed to creating long-term value for our stakeholders and shareholders while upholding the highest standards of responsibility and innovation,” Fakhrunniam said.
FGV said its successes in FY24 were anchored in the strategic execution of its BP26, a comprehensive framework designed to navigate a dynamic and disruptive market.
Central to BP26 are its four strategic thrusts: operational improvement, product and market penetration, new growth areas, and financial and capability building which provides a solid foundation for delivering long-term stakeholder value, it said.
