KUALA LUMPUR (Feb 28): FGV Holdings Bhd reported a net loss of RM1.080 billion for the year ended Dec 31, 2018 (FY18)  compared with a net profit of RM130.928 million recorded in 2017.

In a filing with Bursa Malaysia, it also announced a decrease in revenue of RM13.467 billion in 2018 from RM16.921 billion registered in the 2017 financial year.

The group results was largely hit by impairments and lower average crude palm oil (CPO) price realised of RM2,282 per tonne for the year. 

No dividend was paid during the quarter ended Dec 31, 2018.           

In a separate statement, FGV said it recorded a loss before zakat and tax (LBZT) of RM1 billion against a  profit before zakat and tax (PBZT) of RM403 million the previous year due in large part to impairments and provisions totalling RM1.038 billion.

The decline in average CPO price, during the period under review, also affected the performance at both top and bottom line.

For its fourth quarter ended Dec 31, 2018, it recorded a LBZT of RM139 million as a result of impairments and provisions amounting to RM240 million.

FGV group chief executive officer Datuk Haris Fadzilah Hassan said: "In the fourth quarter, the plantation operations were focused on plugging leaks, revising processes and implementing new controls to bring our estate performance in line with other large players in the industry. 

Some of these initiatives are already starting to bear fruit, but the improvements will be more visible in 2019."

During the quarter, the plantation sector's production of fresh fruit bunches (FFB) slipped three per cent to 1.15 million tonnes from 1.18 million tonnes in line with the Malaysian Palm Oil Board’s assessment of national FFB production trends for 2018.

FFB yield decreased to 4.62 tonnes down from the previous corresponding period’s 4.76 tonnes.

On the back of improving efficiency, oil extraction rate (OER) improved four per cent in the fourth quarter (4Q 2018) to 20.7 per cent compared with 19.92 per cent in the previous year. 

Total CPO production decreased six per cent to 816,406 tonnes compared with 866,698 tonnes in the previous corresponding quarter.

Meanwhile, due in large part to the reduced FFB production volume, ex-mill costs increased to RM1,572 per tonne compared to RM1,507 per tonne previously.

The sugar sector recorded a loss of RM13 million for the quarter in review compared with a profit of RM24 million in the previous corresponding quarter while the logistics and support businesses sector registered a profit of RM19 million, a steep decline from a profit of RM109 million registered in the previous corresponding quarter.

This is due to the impairment of receivables amounting to RM10 million and following a change in the sector’s business model.

FGV’s transformation plan was approved by the board and phased implementation started in October 2018. 

The early initiatives to plug leaks and change processes are already showing early signs of success.

“We have been tracking the performance of estate by estate for the last few months and can clearly see where the gaps are and how to address them.

"To date 59 per cent of FGV’s estates have met their budget numbers or exceeded them,” Haris said.

At the mill level, initiatives to tighten controls and reduce milling losses were underway, FGV is monitoring its mill utilsation rate and has put in place steps to increase sourcing of FFB from  independent smallholders and other third parties.

FGV’s replanting regimen is also on track to normalise palm age profile by 2026.

In 2019, FGV has targeted to  replant 15,000 hectares of with oil palm..

“At a strategic level, plans  to exit non-core businesses are underway. Similarly, manpower rationalisation efforts are being implemented,” he added.