Friday 29 Mar 2024
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KUALA LUMPUR (Feb 24): Felda Global Ventures Holdings Bhd (FGV) saw a 96% plunge in its net profit to RM20.21 million for its fourth quarter ended Dec 31, 2014 (4QFY14) from RM499.92 million a year ago on the back of weak global market sentiment, low energy prices and a weakening ringgit against the greenback.

Nevertheless, it rebounded from a net loss of RM9.33 million in 3QFY14, which was the weakest quarter for the group in 2014.

Revenue for 4QFY14 rose 17% to RM4.3 billion from RM3.67 billion a year ago. Earnings per share (EPS) for 4QFY14 fell to 0.6 sen per share from 13.7 sen per share a year ago. 

FGV (fundamental: 2.1; valuation: 1.8) also recommended a final dividend of 4 sen per share totalling RM145.93 million for the financial year ended Dec 31, 2014 (FY14), subject to approval of shareholders at the forthcoming annual general meeting. This would bring its total dividend payout for the year to 10 sen per share.

For the 12 months period (FY14), FGV saw a 68.8% drop in net profit to RM306.37 million from RM982.25 million in FY13, while revenue climbed 30.8% to RM16.43 billion from RM12.57 billion.

EPS was down at 8.4 sen per share for FY14 compared with 26.9 sen in FY13.

In a filing with Bursa Malaysia today, FGV said the drop in net profit for the year was due to the drought in the first quarter of 2014.

“These were largely due to the long drought in the first quarter of the year which had disrupted fresh fruit bunch (FFB) and crude palm oil (CPO) production and coupled with other factors such as soy bumper crop, sharp drop in the crude oil prices and shadow banking issues in China which resulted in the commodity prices rallies and had shifted the demand in the vegetable oils market,” it said.

The group, meanwhile, attributed the growth in revenue to the full-year effect of the consolidation of Felda Holdings Bhd (FHB) into FGV.

“As earlier reported, one of the main reasons for the revenue growth was attributed to FHB being fully consolidated into FGV’s financial performance.

“Through this, FGV has obtained operational efficiencies as well as synergies within the plantation value chain of the FGV group,” said group president and chief executive officer Datuk Mohd Emir Mavani Abdullah.

The group added that the higher average CPO price of RM2,410 per tonne in 2014 (RM2,333 per tonne in 2013) and a higher oil extraction rate of 21.01% (20.44% in 2013) have also supported revenue growth.

Going forward, FGV expects 2015 to be a challenging year, amid lower crude oil prices, the weakening of the ringgit against the greenback and uncertainty surrounding CPO prices.

“The cold season may hamper CPO demand in the short term but CPO will be back in demand from the traditional markets such as Pakistan, India, China and the European Union once the warmer season and festive season kicks in,” said Emir.

For the longer term, FGV expects its FFB production to further improve in the coming years, supported by a more balanced age profile of its trees as the group continues with its aggressive replanting of 15,000 hectares a year.

FGV shares closed 10 sen or 3.5% higher at RM2.94 today, giving a market capitalisation of RM10.36 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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