Genting Plantations 3Q profit falls as plantation, property segments weigh

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KUALA LUMPUR (Nov 22): Genting Plantations Bhd saw its net profit in the third quarter ended Sept 30, 2017 (3QFY17) dropped 19% to RM76.51 million from RM94.16 million a year ago, dragged by lower contribution from its Malaysian plantation operations, as well as its property segment.

Quarterly revenue, however, rose 8% year-on-year to RM429.36 million from RM396.67 million, on higher fresh fruit bunch (FFB) production in Indonesia, and higher sales of refined palm products, which more than compensated the lower FFB production in Malaysia and lower revenue recognition from the property segment.

For the cumulative nine months ended Sept 30, 2017 (9MFY17), Genting Plantations' net profit rose 48% y-o-y to RM220.01 million from RM148.97 million a year ago, as revenue grew 32% y-o-y to RM1.28 billion from RM966.67 million.

According to the palm plantation firm's Bursa Malaysia filing, the stronger performance was due to stronger palm product selling prices, and higher sales of biodiesel and refined palm products.

Year to date, Genting Plantations said, "crude palm oil (CPO) price was buoyant despite higher y-o-y production owing to sustained demand leading to slower-than-expected national inventory build-up."

Accordingly, the group said it achieved a CPO price of RM2,617 per tonne in 3QFY17, which was steady y-o-y, while the year-to-date selling price was higher at RM2,770 per tonne.

On prospects, Genting Plantations said for the rest of 2017, "the group's results will be contingent on the performance of the plantation segment, which in turn is affected by movements in palm product prices and crop production, global edible oil markets, weather conditions, currency movements, global economic conditions and the implementation of biodiesel mandates in Malaysia and Indonesia."

Although y-o-y FFB production growth has moderated in 3QFY17 and is expected to persist into 4QFY17, Genting Plantations said, "it is optimistic that its full-year production will scale to a new high driven by the growth of its Indonesian region which is expected to contribute closer to 40% of the group's total FFB production."

Meanwhile, given the sanguine property market outlook for the remainder of 2017, the group expects its property sales for this year to match that of the previous year as it continues to focus on affordable residential projects.

Shares in Genting Plantations, a subsidiary of Genting Bhd, closed unchanged at RM10.48 today, giving it at a market capitalisation of RM8.42 billion.