FGV cuts FFB production target for 2017
KUALA LUMPUR: Felda Global Ventures Holdings Bhd (FGV), whose net profit for the second quarter ended June 30, 2017 fell 65%, has revised downwards its fresh fruit bunches (FFB) production target for the year to 4.3 million tonnes from the initial 4.5 million tonnes.
“This is partly because of the current shortage of labour and also the younger age trees which did not perform up to mark. So these two have actually been a setback for FFB production,” plantation sector COO S. Palaniappan told reporters at a briefing yesterday.
He said the 4.3 million tonnes is still higher than last year’s FFB production of 3.9 million tonnes. The group achieved FFB production of 1.04 million tonnes for the second quarter ended June 30, 2017 (2Q’17) and 1.85 million tonnes for the first half ended June 30, 2017 (1H 17).
Officer-in-charge Datuk Khairil Anuar Aziz said FGV has some 35,000 foreign workers at its plantations now and is in the process of recruiting more workers from Bangladesh, Indonesia and India.
He said it is also recruiting local workers but interest is low with only 200 to 300 local workers at its plantations.
For 2H’17, FGV expects the crude palm oil (CPO) price to range between RM2,700 and RM2,900 per tonne. In 2Q’17, the group recorded higher average CPO price of RM2,796 per tonne compared with RM2,570 a year ago.
In 2Q’17, FGV’s net profit fell 65% to RM26 million from RM74 million a year ago while revenue rose 2% to RM4.22 billion from RM4.14 billion a year ago, despite better performances in its plantation and logistics sectors, due to losses incurred in the sugar sector as a result of higher raw sugar cost.
Khairil said the raw sugar price is expected to range between US$0.14 and US$0.15 per lb in 2H’17, while gross margin is expected to improve as the ringgit strengthens and average down the raw sugar cost.
On the divestment of its non-core businesses, Khairil said the sale of its stake in AXA Affin is pending Bank Negara Malaysia’s (BNM) approval and is expected to be completed by yearend. FGV has a 16% stake in AXA Affin.
“We prefer to sell off the 16% to the prospective buyer but there are some regulations that we have to follow and BNM is looking into the approvals. We would like to sell off the whole 16% instead of a certain percentage because it is totally not our core business.
“In terms of value, safe to say it is slightly above RM100 million; that is very important in terms of contributing to our bottom line this year, in line with our aspiration to divest the non-core businesses,” he said, but declined to reveal the prospective buyer.
Khairil said he was not authorised to speak on the domestic inquiry involving CEO Datuk Zakaria Arshad and three others. Members of the board of FGV were not present.
For 1H’17, FGV achieved a net profit of RM28 million compared with a net loss of RM7 million a year ago. Revenue for the period rose 8% to RM8.55 billion from RM7.90 billion a year ago.
FGV’s share price fell 3.12% to RM1.55 yesterday with 6.92 million shares traded, giving it a market capitalisation of RM5.76 billion.
From left: acting group CFO Aznur Kama Azmir, Khairil and Palianappan at FGV’s media briefing yesterday.