KUALA LUMPUR, May 29 — FGV Holdings Bhd (FGV) registered a net loss of RM3.37 million in the first quarter ended March 31, 2019 (Q1 2019) compared with a net profit of RM1.12 million a year ago.
Revenue declined by 9 per cent year-on-year (y-o-y) to RM3.27 billion from RM3.60 billion previously due to a sharp decline in crude palm oil (CPO) prices and lower average selling price in the sugar sector, it said in a filing with Bursa Malaysia today.
Although the company’s operational performance in the plantation sector had improved, this was partially offset by lower average CPO average prices, which dropped 20 per cent to RM1,986 per metric tonne (MT) from RM2,472 MT in Q1 2018.
FGV’s plantation sector posted a higher profit at RM39.83 million for Q1 2019 compared with RM19.46 million previously, due to increased contribution from its downstream activities following the higher margin in kernel crushing and fatty acid business.
Fresh fruit bunches (FFB) production rose by 6.6 per cent to 1.06 million metric tonnes (MT) from 0.99 million MT in Q1 2018, with a yield of 4.38 MT per hectare.
Meanwhile, oil extraction rate (OER) was higher at 20.76 per cent compared with 19.75 per cent achieved in the previous year, while total CPO production increased by 14 per cent to 762,000 MT.
Ex-mill costs dropped by 20 per cent y-o-y to RM1,378 per tonne during the quarter due to improved production volumes, operational effectiveness and efficiencies.
Additionally, the sector’s improved performance is also attributable to a net reversal of impairments of receivables amounting to RM48 million, while its downstream business exceeded internal sales targets, primarily due to the implementation of the B10 biodiesel mandate which came into effect in February.
“We are strategically reviewing our downstream businesses and believe that they will continue to grow and contribute positively to FGV’s performance,” said group chief executive officer, Datuk Haris Fadzilah Hassan in a statement.
He said the sugar sector recorded a loss of RM3 million for Q1 2019 from a profit of RM22 million in Q1 2018, due to an 11 per cent and 15 per cent decrease in the average selling price for MSM Malaysia Holdings Bhd’s domestic and industry sectors, respectively.
The performance was also impacted by a higher refining cost of RM362 per MT, a 12 per cent y-o-y increase.
Meanwhile, the company’s logistics and support businesses sector (LSB) recorded a loss of RM17 million in Q1 2019 from a profit of RM24 million previously, due to provisions for the company’s mutual separation scheme and impairments on overdue balances in line with MFRS 9 requirements.
“Without the exceptional items, the LSB sector would have recorded a profit of RM24 million, which is at par with the profit of the corresponding year.
“Several structural changes and improvements have been made to centralise procurement functions, and 50 per cent from targeted cost savings of RM150 million have been identified through cost-control and rationalisation exercises,” he said.
Haris said FGV has also introduced and formalised its Special Voluntary Disclosure Initiative, Supplier Code of Conduct and Supplier Delinquency Guidelines for more effective, efficient and transparent procurement processes.
“This financial year started with clear signs that FGV is on track to turn its operations around.
“While we continue to monitor all our initiatives, FGV is also exploring strategic initiatives to reduce dependence on palm oil and the impact of CPO prices; thus I am confident that we will be able to achieve the targets set for financial year 2019,” he added. — Bernama