KUALA LUMPUR (Feb 26): FGV Holdings Bhd’s net profit fell 92% to RM103 million in 2023 from RM1.33 billion in 2022 as the group’s mainstay plantation business' earnings plummeted amid lower average crude palm oil (CPO) prices.

Revenue for the financial year ended Dec 31, 2023 (FY2023) dropped 24.26% to RM19.36 billion from RM25.56 billion in the previous year, according to the agribusiness group’s bourse filing on Monday.

The plantation segment saw an 86.08% fall in profit to RM294.82 million from RM2.12 billion previously, as average CPO prices fell to RM3,901 per tonne from RM4,832 in FY2022.

“This was further exacerbated by a 29% increase in CPO production costs ex-mill,” said FGV. Fresh fruit bunches (FFB) production was largely flat with a slight increase to 1.05 million tonnes from one million tonnes previously.

Meanwhile, the decrease in the plantation sector’s profitability was offset by improved profitability in the logistics and other sectors, coupled with reduced losses in the sugar sector.

FGV has agreed to declare a final dividend of three sen per share, involving a payout of RM109.44 million, for FY2023.

For the fourth quarter of FY2023, FGV saw a 79% drop in net profit to RM71.83 million from RM344.3 million a year earlier, as average CPO price fell to RM3,789 per tonne versus RM4,432 previously.

“This was further compounded by a 13% increase in CPO production costs ex-mill and a 10% decrease in CPO sales volume,” it added.

Quarterly revenue dropped 12.03% year-on-year to RM5.36 billion from RM6.1 billion.

As for FY2024, FGV expects CPO prices to range between RM3,900 and RM4,200 per tonne premised on the B35 biodiesel mandate in Indonesia, weak demand from major importing countries, and price competition from rapeseed and sunflower oils.

“In the coming quarters, our plantation sector foresees a slight increase in FFB production and yield as the labour supply recovers and improved estate costs driven by reduced fertiliser and energy cost,” the group said.

“The sector remains steadfast on increasing yield, replanting with higher-yielding seeds and enhancing mechanisation,” it added, anticipating a satisfactory financial performance for FY2024.

Shares in FGV closed unchanged at RM1.46 on Monday, giving the group a market capitalisation of RM5.33 billion.