Second earnings miss for Genting Plantations

KUALA LUMPUR: It was another quarter of missed earnings for Genting Plantations Bhd (Genting Plantations) as its core net profit for financial year 2018 (FY18) of RM143 millionmissed consensus forecast by a sharp 34 per cent, largely attributable to lower-than-expected crude palm oil price.

Kenanga Investment Bank Bhd (Kenanga Research) said this was the second consecutive quarter of earnings disappointment, as fresh fruit bunch (FFB) output in FY18 of 2.08 million metric tonnes (MT) came within its full-year forecast of 2.11 million MT.

On a yearly, comparison, Genting Plantations’ FY18 core net profits tumbled by 57 per cent as FFB growth of 11 per cent failed to offset a 22 per cent drop in the average CPO price to RM2,117 per MT and a 31 per cent plunge in the average palm kernel price to RM1,681 per MT.

“This caused the plantation segment’s operating profit to decline 34 per cent to RM207 million,” Kenanga Research said in a note yesterday.

MIDF Amanah Investment Bhd (MIDF Research) opined that lower price of Genting Plantation s’ s CPO from Indonesia due to zero export levy, where most of its FFB production growth coming from.

“Malaysian CPO could fetch a higher price,” it said in a separate note. “However, production was hit subsequent to adverse weather conditions two years ago.”

Kenanga Research saw that the group’s earnings was cushioned by a 135 per cent increase in the property segment’s operating profit to RM80 million, fueled by full-year contribution of Genting Highlands Premium Outlets and new launches of 124 residential units under the Genting IndahPurah project in Kulai.

“Meanwhile, the downstream segment turned to an operating profit of RM0.2 million from an operating loss RM3.9 million in FY17 due to higher offtake in both its refinery and biodiesel operations, resulting in higher capacity utilisation at 56 per cent and 46 per cent, respectively.”