Genting Plantations Berhad reported its financial results for the year ended 31 December 2021, with net profit of RM470.45 million, representing an 87% improvement over the previous year.
Group revenue improved 25% year-on-year, underpinned by stronger palm products prices which more than compensated for the decline in FFB production as well as lower biodiesel and refined palm products sales volume. Fresh fruit bunch (“FFB”) production for FY 2021 declined marginally by 3% year-on-year mainly attributable to the replanting activities in Malaysia but mitigated by better harvest in Indonesia due to increased harvesting area. The Group achieved higher crude palm oil and palm kernel prices of RM3,444 per metric tonne (“mt”) and RM2,590 per mt in FY 2021 respectively. Buoyed by the stronger palm products prices, EBITDA for the Plantation segment increased year-on-year.
As for the other segments, EBITDA for the Property segment in FY 2021 was higher year-on-year, in tandem with higher sales. AgTech segment’s losses narrowed year-on-year, in line with its lower research and development expenditure
The group’s Downstream Manufacturing segment improved on the back of better margins, prospects for 2022 will track the performance of its mainstay Plantation segment, which is in turn dependent principally on the movements in palm products prices and the Group’s FFB production.
In the near term, palm product prices are expected to be supported by the supply tightness of palm oil and other substitute oils and fats, as well as Indonesia’s recent export ruling. Nevertheless, the export ruling may have an adverse impact on the Indonesian local palm product prices.
Genting Plantation will continue with the AgTech segment to unlock value by leveraging on artificial intelligence to develop optimised genomics-based next-generation planting materials and biological solutions for plants and soil health to improve yields. For the Downstream Manufacturing segment, with Indonesia’s new export ruling and increased allocation for its local biodiesel mandate, the demand for refined palm products from Malaysia is likely to be supported for the immediate term. Meanwhile, the outlook for palm-based biodiesel will remain challenging due to the unfavourable palm oil-gas oil (“POGO”) spread.
