March 1, 2017

KUALA LUMPUR: Felda Global Ventures Holdings Bhd's (FGV) fourth quarter net profit ended December 2016 settled 21.4 per cent to RM110.60 million from RM140.70 million, dented by lower oil palm fruit harvest and one-off impairments.

 

This was despite its fourth quarter revenue rising 25 per cent to RM5.2 billion from RM4.1 billion, posted previously.

 

“The lower fourth quarter profits was hampered by lower palm oil production, despite higher palm oil pricing at RM2,835 per tonne,” said group president and chief executive officer Datuk Zakaria Arshad.

 

“FGV also had to contend with higher raw sugar costs at our unit MSM Malaysia and impairment losses by Felda Iffco Gida in Turkey,” he added.

 

“In rationalising FGV’s assets, we closed four palm oil mills, a refinery and two rubber processing plants,” Zakaria said in a briefing here yesterday.

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“We also incurred a one-off Mutual Separation Scheme cost (MSS) amounting to RM12 million. Around 540 of our 18,000 total workforce participated in the MSS,” he added.

 

“On the other hand, in 2016, we also undertook a fair value re-estimation of Land Lease Agreement liabilities and a change of accounting method in replanting. This method better reflects the economic reality on the ground,” he said.

 

Last year, FGV’s net profit plunged 84.3 per cent to RM29.61 million from 2015’s RM188.8 million. This was despite last year’s RM17.3 billion revenue, being 11 per cent higher than RM15.6 billion in 2015.

 

On the outlook for the next few months, Zakaria anticipates palm oil prices to trade between RM2,600 and RM3,000 per tonne by mid-2017.

 

“This forecast is due to lagged effect of El Niño drought phenomenon stunting supply and recovery in global demand for palm oil.”

 

“This year, we expect to harvest additional 600,000 tonnes of oil palm fruits to 4.5 million tonnes as more trees mature,” he added.

 

On the group's sugar business held under MSM Malaysia Holdings Bhd, Zakaria said his team is updating the government on the rise of raw sugar pricing in the international market.

 

“Our subsidiary MSM Malaysia has appealed to the government to raise current domestic sugar pricing of RM2.84 per kg, in view of lower profits squeezed by costlier raw sugar.

 

The last price review was in 2012,” he said.

 

It was reported that FGV wants to sell its 16 per cent stake in AXA Affin General Insurance Bhd (AAGI) to Affin Holdings Bhd (AHB) for around RM70 million.

 

When asked to comment, Zakaria smiled and noted FGV is still in talks with AHB.

 

“Our 16 per cent stake in AAGI is much higher than the RM70 million figure mentioned.” he added.

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New Straits Times