CEO Morning Brief

Genting Plantations' 3Q Profit Up 6.7% on Indonesian Production Boost

Publish date: Thu, 23 Nov 2023, 08:56 AM
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TheEdge CEO Morning Brief

KUALA LUMPUR (Nov 22): Genting Plantations Bhd's (GenP) net profit rose 6.7% in the third quarter ended Sept 30, 2023 (3QFY2023) to RM80.52 million, from RM75.49 million a year prior, on improved production from its Indonesian estate which more than offset lower downstream sales volume.

Quarterly earnings per share rose to 8.97 sen, from 8.41 sen in the same quarter last year, its filing showed.

Revenue fell 5.66% to RM775.79 million, from RM822.37 million, it added.

The group’s achieved crude palm oil price was RM3,409 per metric tonne (MT) in 3QFY2023 and RM3,517 per MT in the nine-month period ended Sept 30, 2023 (9MFY2023), while palm kernel price was RM1,776 per MT in 3QFY2023 and RM1,888 per MT in 9MFY2023, it said.

Fresh fruit bunch (FFB) production in 3QFY2023 and 9MFY2023 rose as its Indonesian estates featured favourable age profile and expanded harvesting area, it said.

“Meanwhile, the Malaysian estates experienced a relatively muted growth as a result of its ongoing replanting activities,” it added.

For 9MFY2023, GenP's net profit was still down by 54.2% to RM190.29 million, from RM415.56 million in 9MFY2022, which built up to the best year for the plantation group.

Revenue for the period fell 9.7% to RM2.17 billion from RM2.4 billion on the normalising product prices, although partly offset by the improved FFB production.

Meanwhile, GenP said its property segment's profit declined quarter-on-quarter (q-o-q) on lower sales but rose year-on-year due to gain on disposal of investment activities. Its agritech business similarly saw narrower losses q-o-q on lower research and development expenses, but added the losses widened in the nine-month period due to higher opex incurred.

“In the immediate term, the group anticipates palm oil price to be under pressure in view of the steadily rising inventory in Malaysia and key importing countries. In addition, palm oil had to contend with larger supply of competitor vegetable oils in view of the recovery in production of soybean in Argentina and sunflower in the Black Sea region.

“However, in the longer term, palm oil price would remain supported by weaker production prospects owing to slowdown of new planting, deferral of replanting and uncertainties of weather conditions,” GenP said.

It added the impact of El Nino “remains to be seen” amid mixed weather patterns.

The agritech segment, it added, is “working towards the commercialisation of its flagship products, namely GT, a high yielding disease tolerant seed, and the yield booster microbial bio-products”.

The downstream manufacturing segment, it said, continues to see stiff competition due to Indonesia’s export tax structure.

Shares of GenP slipped six sen or 1.08% to close at RM5.48, giving it a market capitalisation of RM4.92 billion.

Source: TheEdge - 23 Nov 2023

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