FGV wants to be major player in agriculture and food industries

KUALA LUMPUR: Loss-making FGV Holdings Bhd is repositioning itself as a major player in the agriculture and food industries, said its chairman Datuk Wira Azhar Abdul Hamid.

“While palm oil will remain a mainstay of our business, we will also deliberately and carefully redeploy appropriate resources to higher-value and synergistic sectors to mitigate against the risk of crude palm oil (CPO) price fluctuations,” he said in his third letter to shareholders posted on Bursa Malaysia yesterday.

The group has had six consecutive quarterly losses and in the quarter ended Sept 30, 2019 (3QFY19), it narrowed its net loss to RM262.41 million from RM849.46 million a year ago. Revenue for 3QFY19 increased 11% year-on-year to RM3.55 billion.

FGV attributed the loss for 3QFY19 to impairments amounting to RM304 million, lower CPO price realised and losses in its sugar business.

Azhar said however, the worst is behind the group and that FGV is on the path towards a new and far better future.

“There are still a couple of lingering challenges with our subsidiary MSM Malaysia Holdings Bhd, but there are plans underway to address each and every one of them, sooner rather than later,” he added. FGV has a 51% stake in the sugar refiner.

In the seven-page letter, the 58 year-old Azhar, who assumed his current post in September 2017, noted that there is still some way to go to rightsize FGV’s manpower cost. As at September 2019, it had cut its manpower number by 8.5% to 17,146 from 18,742 people.

“We had set a target to reduce manpower cost by 10% annually for the next three years, in recognition of the fact that the variable component of pay was unusually high.

“The change in culture too is happening — slower than I would like, admittedly, but still it is heartening to be able to see some change. Today, there is a far greater sense of accountability and awareness of integrity and governance,” he said.

On disposal of non-core assets, Azhar said he is unable to reveal any details for now. “I will say this much, there are several ongoing discussions and we will make the necessary announcements at the right time.”

For 2020, FGV is targeting to achieve 50,000 tonnes of feed production and launch two new premium feed formulations for dairy cattle.

The group is also aiming to reach an annual revenue of around RM200 million to RM300 million for its renewable energy division as it further unlocks the value of waste it produces as part of its daily milling process.

“The assurance you will get from me is, every plan has been challenged and scrutinised thoroughly, and there is no reason why FGV cannot succeed in all of these ventures,” said Azhar.