Felda Global Ventures posts RM904.9m profit

FGV president Datuk Sabri Ahmad says the results beat analysts' forecasts of RM790 million to RM800 million.

THE world's largest crude palm oil (CPO) producer, Felda Global Ventures Bhd (FGV), has posted a net profit of RM904.9 million for the financial year ended December 31 2012.

FGV president Datuk Sabri Ahmad said the results beat analysts' forecasts of RM790 million to RM800 million.

"We also posted higher earnings before interest, taxes, depreciation and amortisation (Ebitda) of RM1.44 billion compared with analysts' expectations of RM1.35 billion," he said at a media briefing on the full-year financial performance here yesterday.

FGV was listed on June 28 2012, in what was Asia's biggest initial public offering and the world's second biggest behind social media network Facebook's float.

The net profit recorded by FGV in 2012 was 35.4 per cent lower compared with RM1.4 billion it posted in the 2011 financial year due to market and operational factors, which included lower CPO prices last year and the group's land lease agreement (LLA) liability.

Sabri said the LLA liability last year was RM210.18 million. It arose following the group's business model change to accommodate its initial public offering exercise.

CPO prices were lower at RM2,843 per tonne last year compared with RM3,218 per tonne in 2011, while fresh fruit bunches production declined by 251.074 tonnes to 4.91 million tonnes.

"However, the group's CPO production for 2012 was 3.29 million tonnes, at par with 2011," he said.

In terms of revenue, FGV registered a 73 per cent increase to RM12.89 billion compared with RM7.45 billion in 2011. Its upstream plantations contributed 75.2 per cent to this.

Its downstream segment, which suffered negative margins in 2011, had a turnaround, recording RM20.5 million in pre-tax profit, Sabri noted.

"Our performance was very encouraging considering the challenging factors surrounding the oil palm industry."

He added that while there are concerns over CPO stock overhang which will continue to plague the industry, increasing demand in the months ahead due to the current low prices and the government's intention to implement biodiesel initiatives should help improve CPO prices.

"Going forward, we remain cautiously optimistic about our 2013 prospects. Yields are expected to show improvements this year compared with 2012."

For the fourth quarter, the group's revenue more than doubled to RM3.86 billion while net profit reduced by 25.2 per cent to RM237 million from RM317 million in the previous quarter.

The board has proposed a final dividend of 8.5 sen, in addition to the interim dividend of 5.5 sen per share paid on October 22 2012, making the total dividend 14 sen per share.

Asked on strategies to cope with rising costs, which include labour, fertiliser and overhead, Sabri said: "Labour costs are increasing and we looking at ways to minimise the impact. The fertiliser cost is expected to go down this year due to cheaper fossil fuels and we now fertilise only four times a year compared with five before, and this reduces labour costs.

"Labour costs are also being reduced as we increase mechanisation and use buffaloes, which are most efficient during the wet season."

Yesterday, the stock closed four sen lower at RM4.44, with 2.47 million shares changing hands.