FGV cuts FFB pro­duc­tion tar­get for 2017

The Sun (Malaysia) - - SPEAK UP - BY EVA YEONG

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.

ZULKIFLI ERSAL/ THESUN

From left: act­ing group CFO Aznur Kama Azmir, Khairil and Palianap­pan at FGV’s me­dia brief­ing yes­ter­day.

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