KUALA LUMPUR (Feb 28): Genting Plantations Bhd's net profit grew 13% for the fourth quarter ended Dec 31, 2023 (4QFY2023) as stronger fresh fruit bunches (FFB) production offset the impact from weaker palm product prices and lower sales at the group’s downstream manufacturing business.
Net profit rose to RM63.19 million or 7.04 sen per share for 4QFY2023 from RM55.86 million or 6.23 sen per share in 4QFY2022. Revenue for 4QFY2023 was at RM800.46 million, up 1.2% from RM791.19 million previously.
The group declared a final dividend of four sen and a special dividend of nine sen, with an ex-date of March 14, raising its total payout for FY2023 to 21 sen, lower than the 34 sen it paid for FY2022.
FFB production was mainly driven by Indonesian estates, arising from their favourable age profile and expanded harvesting area, said Genting Plantations in a filing with Bursa Malaysia on Wednesday.
“Meanwhile, the Malaysian estates experienced a marginal setback as a result of its ongoing replanting activities,” it said.
For the full FY2023, however, Genting Plantations’ net profit fell 46% to RM253.49 million from RM471.42 million in FY2022, dragged by weaker palm products prices; revenue dropped 7% to RM2.97 billion from RM3.19 billion.
Crude palm oil (CPO) prices weakened throughout 2023, said the group, which it attributed to unfavourable price spread between palm oil and other edible oils. Sluggish demand and weak export performance due to bearish economic outlook and ongoing geopolitical tensions also resulted in elevated inventory levels, it said.
Going forward, Genting Plantations expects palm oil prices to remain supported by global supply tightness owing to weaker production prospects and uncertain weather conditions. Other contributing factor include growing biodiesel demand globally following the rise in biodiesel mandates, it said.
It is also anticipating a better harvest for 2024, spurred by additional harvesting areas and progression of existing mature areas into higher yielding brackets in Indonesia.
“However, the production growth may be moderated by on-going replanting activities in Malaysia,” it said.
For its downstream manufacturing segment, the group is expecting to face stiffer competition from its Indonesian counterparts, which enjoy competitive pricing for feedstock due to price differentials arising from the imposition of export levy.
“Additionally, the rising cost of production continue to pose challenges to the segment. Meanwhile, the segment’s palm-based biodiesel will continue to cater mainly for Malaysian biodiesel mandate as biodiesel exports remain challenging,” it added.
Shares of Genting Plantations closed unchanged at RM6.16 on Wednesday, giving it a market capitalisation of RM5.53 billion.