FGV revisits past deals
Plantation company mulls getting rid of underperforming assets
KUALA LUMPUR: Felda Global Ventures Holdings Bhd (FGV) is revisiting its past investments with a view of disposing those which have failed to generate the committed returns.
According to acting chairman Tan Sri Dr Sulaiman Mahbob, the plantation group is re-evaluating and seriously considering disposing of its past acquisitions in plantations and other non-core businesses which will not benefit the group in the long run.
“Looking at some of our past investments, their results are not what we had expected.
“However, the final decision to dispose them will be up to our board of directors after going through our strategy and investment committees,” he said when contacted by StarBiz. FGV has spent RM4bil on seven acquisitions since the company went public in 2012, but so far has little to show in returns.
Last year, chief executive officer Datuk Zakaria Arshad aborted plans by his predecessor Datuk Mohd Emir Mavani Abdullah to acquire stakes in an oil palm planter in Indonesia and a peanut oil maker in China.
Bogged down by its heavy operating cost, the company is now forced to trim its size and win back investor confidence.
The stock was last traded at RM1.68 yesterday, down from its recent peak of RM2.12 in late April. The company sold its new shares to the public in 2012 at RM4.55 each.Analysts said its languishing share price has attracted speculation about the possible entry of a new substantial shareholder.
FGV is 33.67%-owned by the Federal Land Development Authority.
Its chairman, Tan Sri Shahrir Abdul Samad, who was appointed to the post earlier this year, has made no secret about his frustration with FGV’s under-performance.
Sulaiman is the former director-general of the Economic Planning Unit at the Prime Minister’s Department assumed his current post following the resignation of former chairman Tan Sri Mohd Isa Abdul Samad on June 19.
Earlier in June, Zakaria and three top officers were given leave of absence by the board of directors to facilitate an internal investigation over possible business misconduct.
Zakaria claimed that he did nothing wrong.
Sulaiman’s immediate task is to complete the ongoing domestic inquiry.
A decision on whether Zakaria will remain or leave the company is expected by the end of August.
He had been a board member of FGV since 2014 before assuming his current post.
Sulaiman said key priorities at FGV are to strengthen its business performances and corporate governance structure.
Operational-wise, it is business as usual for FGV, said Sulaiman.
Moving forward, FGV will be focusing on enhancing and strengthening the efficiencies of its main business clusters, namely, palm upstream and downstream, sugar, logistics and others.
“This will enable the company to improve on its financial cashflow, sukuk and gearing levels,” added Sulaiman.
Sulaiman noted that FGV would be looking at enhancing its internal efficiencies, ie, maintainence, irrigation and water management in the plantations, as well as undertaking scheduled replanting within budget at about 15,000ha per year, he added.
FGV, which is the world’s largest crude palm oil producer, is also facing severe labour (harvesters) shortage.
“We look forward to getting the first batch of about 300 to 400 foreign workers by next month.”
Sulaiman said inadequate workers in its oil palm plantations was costing the company around RM2mil in revenue per day. To date, it employs about 35,000 foreign workers.
As part of the group-wide consolidation exercise to rationalise non-economical assets this year, Zakaria was reported as saying in March that FGV was closing down four palm oil mills, two rubber-processing plants and a palm oil refinery this year.