FGV reports a return to profitability in Q3

KUALA LUMPUR • Malaysia's Felda Global Ventures (FGV), the world's No. 3 palm plantation operator, returned to profitability in the third quarter on increased production and predicted a further rise in output next year.

The company reported a net profit of RM38.8 million (S$12.7 million) for the quarter to September, compared with a loss of RM73.6 million a year earlier, it said yesterday.

FGV said its quarterly production of palm fresh fruit bunches (FFB) grew 18 per cent year on year, with its plantation operations also boosted by robust palm oil prices.

"Based on the significant improvement in our FFB production for October, we expect FGV to perform better at the close of the financial year compared to 2016," CEO Zakaria Arshad said in a statement.

The profit came even as revenue dipped to RM4.15 billion from RM4.19 billion.

FGV was hit by a management crisis in June when Mr Zakaria was forced to step aside during an investigation, initiated by the firm's chairman at the time, into transactions at a subsidiary.

But the chairman later resigned and Mr Zakaria, who had denied any wrongdoing, was reinstated in mid-October following a four-month leave of absence.

FGV is targeting FFB production of 4.3 million tonnes by the year end, with 2018 output projected at 4.86 million tonnes, Mr Zakaria told a news conference.

The company does not expect its production to be hurt by the La Nina weather event, which brings rains across Asia.

"We don't expect a serious La Nina. Even if there is, it's not as great an impact as El Nino," said Mr Palaniappan Swaminathan, chief operating officer of the plantation sector.

A likely rise in output among producers could weigh on palm oil prices next year, said Mr Zakaria.

He expects the price of crude palm oil, currently around RM2,600 per tonne, to trade at between RM2,500 and RM2,700 for the first half of next year.

FGV's shares rose as much as 2.8 per cent following the quarterly results, outperforming the broader market.

REUTERS

A version of this article appeared in the print edition of The Straits Times on November 24, 2017, with the headline 'FGV reports a return to profitability in Q3'. Print Edition | Subscribe