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KUALA LUMPUR (May 28): Loss-making FGV Holdings Bhd is anticipating an uptick in fresh fruit bunches (FFB) production from the second quarter ending June 30, 2020 (2QFY20) onwards on the back of improved weather conditions.
FGV's net loss widened to RM142.35 million in 1QFY20 from RM3.37 million a year earlier, as poor weather, which was particularly severe in Sabah where about a third of the group's estates are located, took a toll on its supply chain.
If FFB production picks up for the rest of the year, FGV will achieve its yield target of 18.4 tonnes per hectare by year end, compared with about 17-odd tonnes in 2019, said group chief executive officer Datuk Haris Fadzilah Hassan.
"The weather pattern is a nationwide situation and plantations have their own cycles but we do expect the second quarter to be better. Hopefully, the remaining quarters will be able to catch up, in terms of the target.
"Last year, the pricing was quite challenged. This year, pricing looks good but production seems to be a bit of a constraint," Haris Fadzillah told a media briefing today.


He expects crude palm oil (CPO) prices to hover around RM2,200 to RM2,400 a tonne this year.
The forecast is based on the return of Indian palm oil importers to the Malaysian market, coupled with the gradual reopening of the global economy amid the COVID-19 pandemic.
CPO was last traded at RM2,281 a tonne today, according to Malaysian Palm Oil Council (MPOC) data. The CPO futures contract on Bursa Malaysia Derivatives was up RM15 at RM2,360 from the settlement price of RM2,345 for June delivery.
"Besides India, China has also recently given a new life to [palm oil] demand. They are asking some of their agencies or companies to stock up on oilseeds and grains, which is a good sign of the market opening up.
"During the two-month lockdown, their palm oil inventory or stockpile may have depleted. This is a good opportunity for them to replenish, which presents an opportunity for us to basically be in a position to [supply]," he said.
In its results statement earlier today, FGV said it has secured sales for June and July delivery to India, which is a major importer of CPO. The firm recently signed an agreement with an Indian company to further strengthen the latter's participation in the food products market.
Palm oil accounts for nearly two-thirds of India's total edible oil imports. The South Asian nation buys more than nine million tonnes of palm oil annually, mainly from Indonesia and Malaysia, according to Reuters.
Meanwhile, Haris Fadzillah said FGV's oleochemical segment has seen an increase in sales during the COVID-19 pandemic, driven by pent-up demand for hygiene and disinfectant products such as hand sanitisers and soaps locally and abroad.
FGV owns and operates US-based Twin Rivers Technologies, one of the largest oleochemical producers in North America, and has a joint-venture (JV) with Procter and Gamble (P&G), which sells a wide range of cleaning and self-care products.
"In the US, Twin Rivers has seen an increase in sales during this period. In Malaysia, our JV with P&G in Kuantan is also seeing good sales due to the higher demand for cleaning and disinfectant products. This is one part of the business that is doing well," he said.
FGV's oleochemical plant in Kuantan, Pahang, is held under the group's Felda Vegetable Oil Products Sdn Bhd and Felda Procter Gamble (FPG).
FPG, a 50:50 JV between FGV and P&G, is an oleochemicals operation that sources palm kernel oil from FGV to manufacture chemicals, fatty alcohols, methyl esters and glycerin.
On FGV's plan to divest non-core assets worth RM350 million in total, which the group failed to realise last year, Haris Fadzillah said FGV has identified eight assets worth a combined RM150 million to be disposed of this year.
"These assets, which we identified early last year, include Nilai Education [Sdn Bhd], [FGV] Cambridge Nanosystems [Ltd] and [some] bio-power plant. They are part of the RM350 million assets to be divested as part of FGV's transformation plan.
"So far, we realised about RM60 million last year. For this year, most of the divestment deals are already in the final stages," he added.


https://www.theedgemarkets.com/article/fgv-expects-stronger-2q-backed-higher-ffb-production-and-uptick-palm-oil-demand
Sumber: theedgemarkets.com

Muhammed Ahmad Hamdan