Photo by Suhaimi Yusuf/The Edge

KUALA LUMPUR (Aug 30): FGV Holdings Bhd has declared dividend of four sen after posting a 10.39% increase in its net profit for the second quarter ended June 30, 2022 (2QFY22) to RM374.02 million from RM338.82 million a year prior, largely due to higher palm products' margins as a result of firmer crude palm oil (CPO) prices.

According to the plantation giant's Bursa Malaysia filing on Tuesday (Aug 30), quarterly revenue jumped 58.64% to RM7.43 billion from RM4.68 billion. Earnings per share came up to 10.25 sen compared with 9.29 sen in 2QFY21.

The interim dividend of four sen per share comes with a Sept 14 ex-date and is scheduled to be paid on Sept 29.

Its plantation business' profit before tax (PBT) jumped 31.41% to RM620.82 million in 2QFY22 from RM472.42 million a year earlier on the back of a higher average CPO price of RM5,254 per metric tonne (MT) compared with RM3,333 per MT, coupled with better margin in its downstream business as well.

This profitability was pinched by a fair value charge on land and lease agreement (LLA) of RM57.85 million recognised in 2QFY22 versus a fair value gain of RM180.35 million from the revision in yield assumption used in arriving at an LLA liability in 2QFY21.

"Without this, the [plantation business] registered a significantly higher profit of RM678.67 million in the current quarter compared to RM292.07 million in previous year.

"Operationally, FFB (fresh fruit bunch) production reduced to 960,000 MT from 1.06 million MT, while yield decreased to 3.5 MT per hectare in current quarter. OER (oil extraction rate) achieved in current quarter was 20.63%, improved from 20.16% registered in corresponding quarter of the previous year," it added.

Meanwhile, FGV's strong set of earnings for 2QFY22 was offset by its sugar business' loss before tax of RM28.88 million compared with a PBT of RM23.05 million. Despite an increase in the overall selling price of sugar, the segment was dragged down by higher input costs mainly from raw sugar, freight, natural gas and a weakening ringgit.

For the cumulative first half ended June 30, 2022 (1HFY22), FGV's net profit more than doubled to RM743.26 million from RM303.4 million, as revenue for 1HFY22 rose 64.46% to RM13.28 billion from RM8.08 billion, carried by 58% higher year-on-year average CPO price of RM5,165 per MT versus RM3,268 per MT.

Commenting on its half-year results, FGV group chief executive officer Datuk Mohd Nazrul Izam Mansor said that the set of earnings positions is well on track with the group's aspiration to become the world's leading integrated and sustainable agribusiness.

Moving forward, FGV said the group will continue working toward this aspiration emphasising on the need to move beyond its oil palm plantation business.

It noted that it is already involved in the food industry with its latest development with Baladna and Touch group to develop an integrated dairy farming business in FGV Chuping Agro Valley to enable the plantation giant to selectively expand its presence in the food industry.

Additionally, it also said that it has recently collaborated with Padiberas Nasional Bhd (Bernas) to produce a new formulation of native chicken feed brand, ALMA, that uses by-products from local paddy and rice factories.

Touching on its sustainability front, FGV said it is elevating its efforts in respecting human rights by committing to exemplary human rights initiatives to uphold labour standards in fulfilment of the UN's Sustainable Development Goals in eliminating forced and child labour.

"According to the recently published report by Fair Labor Association (FLA), there are no non-compliances identified based on FLA's forced labour benchmarks and [no evidence of child labour was found] at FGV's operations," it added.

At noon break, shares in FGV were down two sen or 1.32% at RM1.50, giving the group a market capitalisation of RM5.47 billion.