KUALA LUMPUR: FGV Holdings Bhd's net profit fell 86.8 per cent to RM31.98 million in the third quarter (Q3) ended Sept 30, 2023 from RM241.67 million a year ago.
The company's revenue fell 20.6 per cent to RM4.91 billion from RM6.18 billion previously.
FGV said the lower revenue was driven by lower average crude palm oil (CPO) prices realised in the current quarter, while the weaker net profit was due to a decline in the profitability of the plantation sector.
For the nine-month period, FGV's net profit dropped to RM39.18 million from RM984.93 million recorded in the same period last year, while revenue was down to RM13.99 billion from RM19.46 billion previously.
The lower profit during the period was mainly due to the weaker average CPO price realised of RM3,948 per tonne against RM4,989 per tonne registered in the previous corresponding financial period in 2022.
"This was further compounded by higher CPO production costs ex-mill by 35 per cent," said FGV.
On its plantation sector, FGV said the plantation sector continued to experience a decrease in margins in 9M 2023 within its downstream and fertiliser businesses.
The share of profit from joint ventures declined from RM45.18 million to RM3.0 million in the current financial period.
"There was also a higher impairment loss of non-financial assets amounting to RM58.94 million, primarily attributable to the impairment of Indonesian plantation assets, compared to RM13.87 million in the previous financial period," it said.
On the sugar sector, FGV said it continued to face challenges stemming from elevated global raw sugar prices, increased freight and natural gas costs and a weakening ringgit amid geopolitical tensions.
"The logistics sector remains steadfast in its commitment to performance enhancement through strategic initiatives, including capacity expansion, asset optimisation, and embracing cutting-edge technology," it added.
Group chief executive officer Datuk Nazrul Mansor said FGV was challenged differently than other major plantation companies.
Nazrul noted that the company was the biggest off-taker of smallholders' fresh fruit bunch (FFB) in Malaysia by procuring FFB from Felda settlers and independent smallholders at a price set by the Malaysian Palm Oil Board, contributing to 70 per cent of its total processed FFB.
"Despite the current challenges, FGV maintains a positive outlook by strategically navigating through this complex business environment, flexing forward to deliver sustainable value to meet the expectations of our stakeholders," he added.