STOCK SAHAM.CO

Genting Plantations’ 3Q net profit drops 26.15% amid higher costs

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KUALA LUMPUR: Genting Plantations Bhd’s net profit for the third quarter ended Sept 30, 2022 (3QFY22) dropped 26.15% to RM75.49 million from RM102.22 million in the same period last year, on lower contributions from its plantation and downstream manufacturing businesses.

This was despite group revenue for 3QFY22 growing 12% to RM822.4 million from RM732.8 million, with increases in all four business segments of plantation, property, agriculture technology (agtech), and downstream manufacturing, its bourse filing showed.

Earnings per share for 3QFY22 fell to 8.41 sen, from 11.39 sen. No dividend was declared.

“Despite higher revenue, the plantation segments’ ebitda (earnings before interest, taxation, depreciation and amortisation) for 3QFY22 declined year-on-year (y-o-y) on account of higher production cost… the agtech segment’s losses were higher year-on-year, owing to higher research and development expenditure,” it said.

Ebitda for the downstream manufacturing segment was also lower y-o-y due to lower sales volume, the plantation arm of Genting Bhd added.

It also noted that its fresh fruit bunch (FFB) production in 3QFY22 was comparable y-o-y, as Indonesia recorded better harvests, backed by favourable age profile and higher harvesting area, which compensated for the lower output in Malaysia due to its replanting activities.

CPO prices, meanwhile, declined sharply when Indonesia lifted its export ban in May that resulted in mounting stockpiles, which consequently saw CPO price settle at a 22-month low of around RM3,300/mt by the end of the quarter.

As such, the group achieved lower y-o-y average CPO price for 3QFY22. Palm kernel (PK) prices, which track the movement of CPO prices, also similarly trended lower in 3QFY22.

Despite the lower 3QFY22 earnings, Genting Plantations’ net profit for the first nine months of FY22 jumped 53.58% to RM415.56 million, from RM270.58 million, as cumulative revenue grew 16.46% to RM2.4 billion, from RM2.06 billion.

On prospects for the remaining months of the year, Genting Plantation said it will track the performance of its mainstay plantation segment, which is in turn dependent on the movements in palm products’ prices and the group’s FFB production.

It further said that palm oil prices for the remaining part of the year is expected to be supported by its current attractive discount against other edible oils and gas oil, the normalising of Indonesia’s stockpile, the impending increase in Indonesia’s biodiesel mandate, and the anticipation of low FFB production ahead of a third consecutive year of wet weather.

“However, bumper harvest of soybean and rapeseed for the current season and the looming economic turmoil may weaken the support on palm oil prices,” it said.

In terms of its own FFB production, it said Indonesia is expected to improve with its favourable age profile and higher harvesting area, but largely moderated by the current wet weather. “Malaysian operations on the other hand may record a setback, as it continues with its replanting activities. Taking into consideration the above, the group’s FFB production is expected to be comparable to the level attained in 2021,” it added.

Genting Plantations’ share price finished 10 sen or 1.54% lower at RM6.40 on Wednesday (Nov 23), bringing the group a market capitalisation of RM5.74 billion.

Source : The Edge Markets

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