By Aidila Razak
Felda Global Ventures Holdings (FGV) net profits were slashed by 25 percent in its fourth quarter ended Dec 31, 2012 compared to the corresponding quarter, driven mostly by weak crude palm oil or CPO prices and a drop in oil palm fruit production.
Net profits dropped to RM237 million in the fourth quarter ended Dec 31, 2012 from RM316 million the corresponding quarter.
This drove 2012 profits down 35 percent from RM1.4 billion in 2011 to RM904 million this year,
Besides poor conditions in the palm oil market, FGV said profit was adversely affected by higher costs of harvesting, replanting and manuring.
It added that it also had to stump up an extra RM61.1 million to fund its initial public offering and share based expenses, plus make lease payments of RM210.2 million to the Federal Land Development Agency (Felda).
The IPO happened last June while the lease agreement came into force in January 2012.
It also cited a decrease in contribution from associates Tradewinds and Felda Holdings Bhd by 54 percent and 32 percent respectively.
Decline expected
Alliance Research analyst Arhnue Tan said while the numbers are “slightly below expectations”, the poor production does not come as a surprise.
Agreeing, a CIMB Research analyst said that FGV’s results match numbers posted by its peers.
“Every planter has recorded a drop in earnings, although the degree of the drops will depend on each company’s earning mix,” a CIMB Research analyst said.
She said that at RM861 million, FGV’s comprehensive income for the year is above market expectations which hovered at around RM780 million.
“FGV needs CPO prices to go up, but this is out of its control,” she said
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