KUALA LUMPUR (Aug 28): Genting Plantations Bhd's net profit dropped 20.6% to RM20.74 million for the second quarter ended June 30, 2019, from RM26.14 million a year ago, as lower palm products selling prices outstripped the impact of higher fresh fruit bunches (FFB) production.

This was despite revenue growing 30.6% to RM525.74 million, from RM402.65 million in the prior-year period, mainly arising from higher demand for its refinery and biodiesel as well as property products, the group said in a filing with the stock exchange.

The group declared an interim dividend of 3.5 sen per share, compared with 4.75 sen a year ago.

Genting Plantations said markedly lower year-on-year crude palm oil and palm kernel selling prices were recorded for the quarter due to several factors, including elevated inventory levels, weakness in soybean prices arising from the lingering US-China trade discord and uncertainty of demand from importing countries.

This resulted in a 33% decline in its mainstay plantation segmental profit, the group said.

Earnings at its property segment was higher mainly due to higher sales achieved, while the downstream manufacturing segment registered higher sales, capacity utilisation and improved margins.

The group's biotechnology segment, meanwhile, continues to bleed as research and development activities are carried out.

Gentiong Plantations' weaker second quarter earnings resulted in the half-year net profit more than halving to RM62.43 million, from RM127.12 million in the corresponding period last year.

Half-year revenue still rose 23.2% to RM1.15 billion, from RM931.72 million a year ago.

Genting Plantations said it expects its FFB production growth to extend into the second half but said its prospects for the rest of the year will depend principally on the movements in palm products prices as well.

It said the overall performance of its plantation segment will be "adversely impacted" should the prevailing low palm products prices persist for the remainder of the year.

The benchmark palm oil contract for November delivery was last done at RM2,256 a tonne today.

The group said it will will focus on expanding its export markets for its downstream manufacturing segment and sees local demand for biodiesel improving following the implementation of the mandatory B7 and B10 mandates, although this may be moderated by domestic competition.

Meanwhile, Genting Plantations also plans to align its offerings at its property segment to the broader market demand in view of the soft property market outlook, despite registering higher property sales in 1HFY19.

"The Premium Outlets are expected to perform well in the second half with the introduction of new tenants such as Bottega Veneta, Prada, Longchamp and Burberry along with the contribution from the third phase of Johor Premium Outlets," it added.

Shares in Genting Plantations shed 20 sen or 1.96% today to close at RM10, valuing the group at RM8.97 billion.