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Malaysia's FGV optimistic on recovery from sharp quarterly loss

[KUALA LUMPUR] Malaysian palm giant FGV Holdings reported a deep first-quarter loss on lower output and a demand slump due to the Covid-19 pandemic, but was upbeat that the return of top buyers India and China will boost its performance in the second half of the year.

First-quarter crude palm oil output from the world's largest palm producer fell 33 per cent year-on-year because of reduced fertiliser application and dry weather conditions last year, but FGV expects yields to normalise in the next month.

The company aims to produce 4.5 million tonnes of crude palm oil this year, it said, up from 4.4 million tonnes in 2019.

"With Indian trade restored, and the easing of Malaysia's movement control order, sales are expected to pick up in tandem with production, as the impacts of drought and fertilizer adjustments in 2019 wane," chief executive officer Haris Fadzilah Hassan said on Thursday.

FGV said that while sales volume fell during the quarter ended on March 31, it has secured sales to India for delivery in June and July. It has also signed an agreement with an India-based company to strengthen its participation in the food products market there, giving no further details.

Haris Fadzilah also said there are signs that other countries, including China, plan to replenish palm oil supplies as they lift their coronavirus lockdown measures.

FGV expects crude palm oil prices to trade between 2,200 to 2,400 ringgit per tonne this year.

Malaysia benchmark crude palm oil was seen at 2,262 ringgit (S$736.77) per tonne on Thursday.

Haris Fadzilah said FGV is also exploring potential acquisitions in the food processing sector, signalling interest in companies that need palm oil and sugar, its main products.

FGV reported a net loss of 142.3 million ringgit for the quarter, compared with a loss of 3.4 million ringgit in the same period last year.

Revenue fell 15 per cent to 2.78 billion ringgit.


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