This article first appeared in The Edge Financial Daily on November 28, 2019

KUALA LUMPUR: Genting Plantations Bhd reported a 23.6% drop in its third-quarter (3QFY19) net profit to RM17.96 million, from RM23.51 million for the corresponding quarter last year, dragged mainly by weaker palm product prices, lower contributions from its property business, and losses in its biotechnology segment.

Its revenue contracted a marginal 2.8% to RM475.37 million from RM488.84 million, on lower contributions from its property developments which were at their early stages of construction, the group said in a stock exchange filing yesterday. Revenue from its plantation and downstream manufacturing segments, however, improved year-on-year mainly on higher fresh fruit bunch (FFB) production and an improved sales volume of derivative palm products.

For the cumulative nine-month period, Genting Plantations’ net profit almost halved to RM80.39 million from RM150.63 million a year ago, despite a 14.2% growth in revenue to RM1.62 billion from RM1.42 billion.

For the remaining quarter ending Dec 31, the group expects its plantation segment to derive higher palm product prices on an improved market outlook from anticipated tightening of palm oil supply and increasing demand, particularly from the biodiesel mandates in Indonesia and Malaysia.

“The group expects its FFB production growth to extend into 4QFY19, supported mainly by its Indonesian operations with additional mature areas and a better age profile.

“However, the group’s crop output in 4QFY19 is expected to be moderated by the impact of the dry weather conditions that beset its operations across Malaysia and Indonesia for the most part of 2019,” it added. On the property segment, the group said it will focus on marketing its offerings to the broader market in view of the prevailing soft property market in general.

Shares in Genting Plantations closed six sen or 0.57% higher at RM10.60 yesterday, bringing its market capitalisation to RM9.51 billion. The stock has gained near 12% in the past 12 months.