KUALA LUMPUR: FGV Holdings Bhd posted a net loss of RM12.9 million in the second quarter ended June 30, 2023 (Q2 2023) compared with a net profit of RM374.02 million, a year ago largely attributed to lower profits registered in plantation sector.
Profit in plantation sector plummeted to RM13.76 million from RM620.82 million in corresponding quarter of the previous year mainly attributed to lower average crude palm oil price (CPO) price realised of RM4,000 per MT compared with RM5,254 per MT registered in previous year's corresponding quarter coupled with lower CPO sales volume by 17 per cent and higher CPO production costs ex-mill by 37 per cent.
It clocked in a revenue of RM4.49 billion in the quarter under review, down 39.5 per cent from RM7.43 billion in the same period last year, on the back of lower average CPO price realised in current quarter.
For the six months ended June 30, 2023 (1H23), the company posted a net loss of RM805,000 from a net profit of RM743.26 million in the same period last year.
Revenue dropped 31.6 per cent to RM9.09 billion from RM13.28 billion in 1H22.
The company said financial performance was affected by ongoing weather uncertainties, which continue to be one of the major factors influencing CPO prices that resulted in a decline in profit within the plantation sector.
"Despite the foreseen challenges in the second half of FY2023, our primary focus is to enhance efficiency through effective operations management to leverage our inherent strengths.
"Key strategic initiatives are being implemented to mitigate these challenges and enhance productivity. We anticipate continued improvement for the rest of the year amidst challenges," said group chief executive officer Datuk Nazrul Mansor.
Pre-tax profit in the plantation sector was down to RM75.65 million for 1H23, primarily attributed to a lower average CPO price realised of RM3,995 per tonne compared to RM5,165 per tonne registered in the previous financial corresponding period. This was coupled with a 41 percent rise in CPO production costs ex-mill.
The sector was also affected by the reduced margins in the downstream and fertiliser businesses, a lower share of profit recorded from joint ventures at RM12.55 million, as well as a net impairment loss of property, plant and equipment amounting to RM40.86 million.
The company noted that CPO prices are expected to hold steady in the near term, ranging between RM3,800 per tonne to RM4,000 per tonne, primarily shaped by adjustments in Indonesia's CPO export quotas.
Although there was recent improvement in labour shortages, the company is upskilling new harvesters to improve productivity while remaining cautious about the potential impact of El Nino weather on the upcoming peak season.