FGV (5222) - FGV 3Q net loss widens to RM94.9 million
KUALA LUMPUR (Nov 22): Felda Global Ventures Holdings Bhd (FGV) saw its net loss widen to RM94.87 million or 2.6 sen per share in third quarter ended Sept 30, 2016 (3QFY16) compared to RM33.92 million or 0.9 sen per share a year ago.
The weaker financial results was largely due to lower crude palm oil (CPO) production, higher raw sugar costs as well as lower earnings from downstream segment. It was also dragged down by the significant losses suffered by one of the jointly-controlled entities due to stock losses discovered in 3QFY16.
In a filing with Bursa Malaysia today, FGV said its revenue declined by 7% year-on-year (y-o-y) to RM4.19 billion from RM4.51 billion.
For the nine-month period (9MFY16), FGV posted a net loss of RM98.19 million or 2.7 sen per share against the net profit of RM15.74 million or 0.4 sen per share a year before.
Meanwhile, the group's revenue stood at RM12.09 billion, up 6% y-o-y from RM11.41 billion.
In 9MFY16, FGV's profit from the palm upstream segment rose by 32.8%, mainly attributable to lower fair value charge in land lease agreement (LLA) of RM207.28 million compared to RM231.73 million a year earlier.
"Excluding the LLA effect, the segment's profit increased to RM343.73 million from RM334.48 million last year. The segment's performance improved largely due to the cost savings initiatives undertaken by the group," it said.
Operationally, CPO production dropped by 18% to 1.93 million tonnes in tandem with the 14% decrease in fresh fruit bunch production. However, higher average CPO price of RM2,458 per tonne was realised against RM2,236 per tonne realised last year. Oil extraction rate achieved was lower at 20.66% compared to 20.74% achieved in the previous year.
Notably, FGV's profit from the sugar segment declined by 50.7% as it was significantly impacted by the increase in raw sugar costs. However, the reduction in profit was mitigated by higher sales volume for domestic and export segment by 23% and 7% respectively.
FGV's palm downstream segment recorded a loss of RM6.76 million compared to a profit of RM7.07 million a year before. It suffered weak margins in refined bleached deodorised palm kernel oil and crude palm kernel oil from kernel crushing activities and higher administrative cost posted in packed product business due to a new refining plant in Pasir Gudang.
Commenting on its future prospects, FGV expects the performance of the group to be challenging for FY16 with another quarter to close the year. Hence, the group is expected to record a loss for the full financial year.
"The seasonally lower crop production for the remaining quarter would be potentially compensated by the positive outlook of the CPO prices in the near term on the back of full year tighter supply of palm oil by both Indonesia and Malaysia due to El Nino impact," it said.
The upside of the CPO prices, however, would be limited by the edible oil supply and reduced competitiveness of CPO from narrower price discounts against soy bean oil.
"The slower global growth and the volatility of the currency market arising from the strengthening of US dollar continue to affect the world economy and the tough operating conditions of the group," it said.
Shares of FGV ended the morning trades 5 sen or 2.6% lower at RM1.84, with 6.14 million shares changing hands. It has a market capitalisation of RM6.86 billion.
SUMMARY OF KEY FINANCIAL INFORMATION
30 Sep 2016
CURRENT YEAR QUARTER
CURRENT YEAR TO DATE
30 Sep 2016
30 Sep 2015
30 Sep 2016
30 Sep 2015
|2||Profit/(loss) before tax|
|3||Profit/(loss) for the period|
|4||Profit/(loss) attributable to ordinary equity holders of the parent|
|5||Basic earnings/(loss) per share (Subunit)|
|6||Proposed/Declared dividend per share (Subunit)|