Cepatwawasan 2Q net profit up 66.91% to RM15.81m on higher FFB price

KUALA LUMPUR (July 25): Cepatwawasan Group Bhd’s net profit for the second quarter ended June 30, 2022 (2QFY22) rose 66.91% to RM15.81 million from RM9.47 million in the same period a year ago due to a substantial increase in average fresh fruit bunch (FFB) selling price which outweighed the impact of a decrease in its plantation segment's FFB production.

Quarterly revenue grew 31.83% to RM107.29 million from RM81.39 million, the Sabah-based plantation company said in a bourse filing on Monday (July 25). Earnings per share was at 5.12 sen from 3.07 sen previously.

“The achievement was mainly due to higher average selling prices of crude palm oil (CPO), palm kernel (PK), FFB and empty fruit bunch (EFB) oil by 59%, 46%, 67% and 34% respectively.

"Productions of CPO, PK and FFB however decreased by 11%, 12% and 16% respectively while production of EFB oil increased by 18%,” it added.

On a quarterly basis, Cepatwawasan’s net profit was up from RM15.23 million in the immediate preceding quarter mainly due to higher contribution from its mill segment as a result of an increase in mill margin from an improvement in mill oil extraction rate (OER). Revenue increased from RM94.63 million in 1QFY22.

For the six-month period, Cepatwawasan’s net profit surged almost three-fold or 171.57% to RM15.23 million from RM5.61 million a year prior, as revenue jumped 87.05% to RM94.63 million from RM50.59 million.

Looking ahead, Cepatwawasan noted CPO prices have fallen more than 40% from its recent peak of RM6,324 in June this year following a policy shift in Indonesia to ease its export rules to encourage shipments and reduce its high palm oil inventories.

Whilst the increasing CPO output from Indonesia is pushing down CPO prices, it expects the lingering severe shortage in manpower to continue to hamper Malaysia’s FFB production.

In addition, Cepatwawasan viewed the escalating production costs caused by the significant increase in fertiliser price and the recent introduction of RM1,500 minimum wage will also affect the group’s performance.

“Confronted with all these challenges, the group remains focused on improving labour productivity, mechanisation initiatives and cost efficiency as well as increasing FFB yield,” it said.

At Monday’s lunch break, Cepatwawasan shares were unchanged at 68.5 sen bringing a market capitalisation of RM218.1 million.