KUALA LUMPUR (Nov 30): FGV Holdings Bhd registered a near 40% year-on-year fall in net profit in the third quarter ended Sept 30, 2022 (3QFY2022), dragged down by losses incurred in its sugar producing business.

Net profit fell to RM241.67 million against RM399.39 million a year ago, although revenue grew 16% to RM6.18 billion from RM5.32 billion, thanks to higher palm oil prices.

The group, which controls a 51% stake in MSM Malaysia Holdings Bhd, said the sugar segment suffered an erosion in margin mainly attributable to high input costs of raw sugar, freight, natural gas and the weakening of the ringgit despite the increase in overall average selling prices.

FGV said its plantation segment was also affected by lower fresh fruit bunch (FFB) production, and increase in manuring and labour costs as a result of the minimum wage implementation.

For the cumulative nine-month period (9MFY2022), net profit rose 40% to RM984.93 million from RM702.79 million in the previous corresponding period, while revenue grew 45% to RM19.46 billion from RM13.39 billion.

For the final quarter of 2022, FGV said palm oil supplies are expected to remain tight due to adverse weather in Malaysia as well as continued shortage of workers in the estate.

“As a result, the CPO prices are expected to average around RM4,000 per tonne in 4QFY2022,” it said.

FGV also said it will continue to intensify its recruitment of new foreign workers in the coming quarters as labour shortages remain a key risk in plantation operations.

In addition, it said its sugar business is expected to face a challenging environment for the remainder of the year due to higher input costs, primarily for raw sugar, freight, natural gas, and the weakening of the ringgit.

FGV, which fell 32% from its year-to-date high of RM2.04 in April, was trading one sen or 0.7% lower at RM1.39 per share before the noon market break, valuing the group at RM5.07 billion.