Friday 29 Mar 2024
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KUALA LUMPUR (May 27): Genting Plantations Bhd’s net profit tumbled 48% on-year to RM52.66 million or 6.83 sen per share in the first quarter ended March 31, 2015 (1QFY15), from RM101.06 million or 13.22 sen per share, on lower palm prices and fresh fruit bunches (FFB) yield.

In a filing with Bursa Malaysia, Genting Plantations' (fundamental: 2.7; valuation: 1.4) revenue fell 2.5% to RM324.4 million in 1QFY15 compared with RM322.89 million in 1QFY14.

Genting Plantations said lower palm products selling prices and FFB production outweighed increases across all its other segments. Lower FFB yield had also increased unit cost of production, it added.

The company said despite an increase in production in Indonesia due to a sizeable newly-mature areas and young mature areas progressing into higher yielding brackets, the group’s FFB production was 6% lower year-on-year (y-o-y) in 1QFY15, mainly due to a weather-induced drop in crop output at its Sabah estates.

The company said average crude palm oil prices dropped 16% to RM2,246 per tonne in 1QFY15, down 16% from the same period last year amid a slowdown in palm oil exports and weaker cues from the soybean and crude mineral oil markets.

The average palm kernel price was 12% lower y-o-y as sentiment in the lauric oil market was comparatively less bullish than a year ago during the immediate aftermath of Typhoon Haiyan’s impact on coconut oil production.

Genting Plantations said the overall reduction in the group’s 1QFY15 earnings before interest, taxes, depreciation and amortisation (EBITDA) was exacerbated by a foreign currency translation loss of RM17.6 million arising from the weakening of the Indonesia Rupiah on its US dollar denominated borrowings as opposed to a gain of RM20.7 million in 1QFY14.

Genting Plantations expects crop production growth prospects for the year to be primarily driven by its Indonesian plantation segment in view of its younger age profile.

It also recognises the potential for further yield improvement in its Indonesia plantation segment, compared with the Malaysian estates.

For the property segment, the company said it would remain focused on its core strength of offering mixed landed properties.

As for the downstream manufacturing segment, it will focus on expanding its reach for biodiesel supply for the requirements of the mandatory B7 programme in Sabah and Sarawak and look out for other opportunities to cater to discretionary biodiesel demand.

Genting Plantations closed 10 sen or 1% lower at RM9.88, with a market capitalisation of RM7.722 billion.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)

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