KUALA LUMPUR (Aug 27): FGV Holdings Bhd (KL:FGV) has returned to the black with a net profit of RM86.38 million in the second quarter ended June 30, 2024 (2QFY2024) compared with a net loss of RM12.9 million a year earlier, on higher profits in the plantation, and logistics and support divisions. This was partially offset by weaker performance in the sugar, and oils and fats divisions in the current quarter.

It also managed to turn around after posting a net loss of RM13.49 million in 1QFY2024.

The better quarterly performance saw it posting an earnings per share of 2.37 sen for 2QFY2024 compared with a loss per share of 0.35 sen for 2QFY2023.

FGV also saw revenue for the quarter rise by 22.7% to RM5.52 billion from RM4.49 billion in 2QFY2023, driven by a higher average crude palm oil (CPO) price and sales volume. The CPO price rose to RM4,103 per tonne in 2QFY2024 compared with RM4,000 per tonne in 2QFY2023.

In a filing with Bursa Malaysia on Tuesday, FGV said its plantation division registered a profit of RM100.55 million in 2QFY2024 compared with a loss of RM61.64 million a year earlier. This was primarily driven by a 23% rise in fresh fruit bunch (FFB) production to 960,000 tonnes from 780,000 tonnes in 2QFY2023, resulting in a higher yield of 3.76 tonnes per hectare from 2.91 tonnes per hectare respectively.

Additionally, the FFB price increased by 6.5% to RM819 per tonne, while estate operational costs decreased by 6%, it added.

No dividend was declared for 2QFY2024.

For the cumulative six months ended June 30, 2024 (1HFY2024), the group also managed to post a net profit of RM72.89 million compared with a net loss of RM805,000 in 1HFY2023, while revenue rose 10.7% to RM10.06 billion from RM9.09 billion a year earlier.

On prospects, FGV said demand and supply for palm oil are expected to stay steady in the second half of 2024. It is projecting the CPO price to be between RM3,800 per tonne and RM4,000 per tonne in 2024.

"Operationally, FGV will continue prioritising yield enhancement initiatives within its plantation operations by closely monitoring crop harvesting processes and expanding mechanisation for efficient FFB evacuation. The group is actively diversifying its FFB supplier base to enhance supply chain stability.

"On the cost side, the drop in fertiliser prices has helped reduce production cost pressures and is anticipated to continue softening throughout 2024," it added.

As for the sugar division, it remains cautious about the rising geopolitical tensions, which may increase input costs and impact financial performance. Simultaneously, the division is strengthening its presence in domestic and export markets while exploring new regional opportunities.

Barring any unforeseen circumstances, FGV expects a satisfactory performance for the financial year ending Dec 31, 2024 (FY2024), aligned with industry expectations.

At 2.34pm on Tuesday, FGV shares were traded up 3 sen or 2.54% at RM1.21, giving it a market capitalisation of RM4.41 billion. The stock has fallen 12.3% so far this year.