KUALA LUMPUR, Aug 28 (Reuters) - Malaysia’s FGV Holdings Bhd posted a fifth consecutive quarterly loss on Wednesday, weighed down by low crude palm oil (CPO) prices and losses from its sugar unit, which the company said it is reviewing.
The world’s largest crude palm oil producer posted a loss of 52.2 million ringgit ($12.46 million) for the second quarter ending in June, versus a loss of 23 million ringgit a year ago. Revenue fell to 3.28 billion ringgit versus 3.44 billion ringgit last year.
“Overall performance was affected by a number of factors, chief among which are softer CPO prices and the poor showing in the sugar business,” said Chief Executive Officer Haris Fadzilah Hassan in a press statement.
“This is the main reason why we are reviewing FGV’s sugar business, because we believe the current structure is suboptimal and does not consider policy shifts or industry trends.”
FGV had initiated a transformation plan to improve its performance and operations last year. It said in February it planned to divest its non-core and non-performing assets, trim its manpower, and shut six of its mills.
However, FGV cautioned in its financial statement that CPO prices will remain “volatile in the coming quarters due to high stockpiles, competitive pricing from Indonesia and expectations of high seasonal production,” though better exports ahead of festive seasons and demand in biodiesel production could support prices.
“We expect CPO prices to pick up towards the end of the year and next year’s average selling price should be higher than this year’s,” said Haris, though he added that the anticipated imposition of import taxes by India may impact future prices.
Earlier this week, India’s trade ministry recommended raising its tax on refined palm oil imports from Malaysia to 50% from 45% for six months to curb cheaper imports of the commodity, a government document said.
India, the world’s biggest edible oil importer, currently imposes a 40% import tax on CPO and 50% on refined palm oils.
But Malaysian refined palm oil imports have been taxed at 45% since January under separate agreement with the country, leading to a surge in Malaysia’s refined palm exports to India in the first half of 2019. ($1 = 4.1900 ringgit) (Reporting by Emily Chow; editing by Christian Schmollinger)
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