KUALA LUMPUR (Aug 2): Genting Plantations Bhd posted a net profit of RM70.97 million in the second quarter ended June 30, 2023 (2QFY2023), down 68.24% from RM223.43 million a year ago, owing to notably weaker palm product prices.

Average selling price (ASP) of crude palm oil fell 27% to RM3,584 per tonne in 2QFY2023, compared to RM4,907 per tonne, while palm kernel’s ASP dropped 44% to RM1,945 per tonne from RM3,484 per tonne, its bourse filing showed.   

Earnings per share also dropped to 7.91 sen in 2QFY2023, from 24.9 sen a year before.

Revenue for the quarter fell 22.93% to RM805.95 million in 2QFY2023, from RM1.05 billion previously.

During the quarter, it also booked a lower exceptional gain of RM1.6 million compared to RM7.56 million a year ago (2QFY22).

The board of directors declared an interim single-tier dividend of eight sen per share, 47% lower compared to the 15 sen dividend paid a year ago, payable Sept 25, 2023.

For the first six months of FY2023, its net profit declined 67.72% to RM109.78 million, from RM340.08 million previously, as revenue shrank 11.8% to RM1.39 billion, from RM1.58 billion previously.

The group in a press release said its prospects for the second half of 2023 (2HFY2023) will track the performance of its mainstay plantation segment, which is, in turn, dependent principally on the movements in palm products prices and the group’s fresh fruit bunch (FFB) production.

In the short run, the group expects palm product prices to remain supported as palm oil production is seen impacted by the looming El Nino phenomenon in major palm oil producing regions.

Additionally, it said palm product prices have gained strength amidst geopolitical tensions in the Black Sea region, which has disrupted supply of sunflower oil, along with the drought in North America potentially affecting production of soya and canola oil.

Meanwhile, the group anticipates a modest year-on-year growth in FFB production for 2HFY2023, spurred by the favourable age profile and expanded harvesting area in Indonesia.

“Nevertheless, the ongoing replanting activities in Malaysia may have a moderating effect on the group's production growth. Furthermore, the potential occurrence of El Nino could also impact the group's production in 2HFY2023, the extent of which will depend on the timing and severity of the phenomenon,” it noted.

As for its property segment, Genting Plantations said it expects to continue offering products which cater to a broader market segment, taking into consideration prevailing market sentiments. 

Its premium outlets are expected to continue on a growth trajectory, underpinned by enhanced tenant portfolio, and having recently conducted a groundbreaking event for its first foreign expansion, namely Jakarta Premium Outlets, situated in Alam Sutera, to the southwest of Greater Jakarta. 

Meanwhile, its agtech segment will continue to expand the application of biological solutions, superior planting material, automation, mechanisation and digital solutions at the group’s estates with the goal of improving operating efficiency, enabling traceability and enhancing sustainability. 

The downstream manufacturing segment continues to face stiff competition for its refined palm products due to Indonesia's export tax structure. 

"On the other hand, the segment’s palm-based biodiesel will cater mainly for Malaysian biodiesel mandate as biodiesel exports remain challenging," it added.    

Genting Plantations’ share price closed down two sen or 0.35% to RM5.71, bringing the group a market capitalisation of RM5.12 billion.

Year-to-date, the stock has fallen 11% from RM6.40 on Dec 30, 2022.