KUALA LUMPUR: FGV Holdings Bhd’s net profit soared to RM338.82 million in the second quarter (Q2) ended June 30, 2021 from RM20.55 million in the corresponding quarter in 2020, contributed by the plantation, sugar and logistic businesses.
Revenue increased to RM4.68 billion from RM3.29 billion, the plantation company said in a filing with Bursa Malaysia today.
FGV said the plantation sector registered a higher profit of RM421.63 million compared to the RM105.58 million loss recorded in the previous financial corresponding period.
“This was mainly due to higher average crude palm oil (CPO) price of RM3,268 per tonne against RM2,453 per tonne previously, despite a lower sales volume of 18.9 per cent.
“The performance of the sector was also boosted by the fair value land lease agreement (LLA) gain of RM36.60 million against RM133.23 million in the previous year,” it said.
The LLA gain for the current year was attributed mainly to the revision in the yield assumptions used in arriving at the LLA liability.
However, fresh fruit bunches (FFB) production dropped by 5.3 per cent from 1.90 million tonnes to 1.8 million tonnes.
“This led to a lower yield of 7.11 tonnes per hectare compared to 7.51 tonnes reported in the previous corresponding period, while oil extraction rate achieved was higher at 20.12 per ent compared to 20.05 per ent registered in the previous period.
“The improvement was partially offset by the fair value loss on derivatives of RM11 million compared to RM42.92 million gain reported in the previous financial period and impairment of rubber plantation of RM7.86 million,” it said.
Meanwhile, FGV said its sugar sector registered a profit of RM73.73 million compared to RM54.42 million loss in the previous financial period mainly attributable to improved margin achieved from the higher average selling price.
The logistic and others sector recorded an increase in profit to RM31.88 million from RM22.62 million profit in the previous financial year.
“Profit from the logistics division increased by three per cent, attributed to the higher tonnage and bulking volume while others division registered a lower loss of 56 per cent underpinned by lower depreciation cost in the information technology business and reduced expenses in the travel business,” it said.
Going forward, FGV is of the view that COVID-19 remains to be the single largest risk to the group as the prolonged pandemic along with the new variants of concern continue to affect the plantation industry.
“Some of the group’s operations are facing temporary shutdowns and shortage of migrant workers.
“To mitigate the impact of the shutdown, vaccination programmes are being expedited across our operations,” it said.
On a positive note, CPO price is expected to remain high due to the lower production of palm oil and other oils.
The sugar business remains upbeat as demand for refined sugar continued to be stable despite the nationwide lockdown.
Meanwhile, the logistics business will continue to implement its strategies to improve its sales volume, margin, and operational efficiencies.
“Barring any unforeseen circumstances, the board is of the opinion that the group’s performance for the financial year ending Dec 31, 2021 will be in line with industry developments,” it noted. – Bernama