‘FGV ON RIGHT PATH TO NEW FUTURE’
Group aims to be big player in agriculture and food sector, says chairman
FGV Holdings Bhd chairman Datuk Azhar Abdul Hamid said the worst is over for the plantation group and that it is on the “right path towards a new and better future”.
He said FGV would be repositioned as a major player in the agriculture and food industries.
Stressing that palm oil would remain a mainstay of its business, he said the group would redeploy appropriate resources into higher value and synergistic sectors to mitigate the risk of crude palm oil (CPO) price fluctuations.
“As 2020 dawns with expectations of higher commodity prices in a persistently uncertain operating environment, I look back on an eventful 2019 for FGV with a combination of pride and frustration,” said Azhar in his third letter to FGV shareholders in nearly a year.
“I believe the worst is behind us and that FGV is definitely on the right 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.”
Azhar said while the upturn in CPO price provides a welcome respite, the board of directors intends to transform FGV into an organisation that is not wholly-dependent on CPO.
He said FGV would make sure that its strategic diversification benefits all stakeholders, especially its 112,635 smallholders.
“You may be aware that FGV buys twothirds of its fresh fruit bunches (FFB) from Federal Land Development Authority and independent smallholders. Thus, they are an integral part of our supply chain.
“We provide these farmers with that all-important link to international markets and we ensure that they are paid fair market rates in accordance with international prices.”
On culture change and human resource planning, Azhar said FGV has set a target to reduce manpower cost by 10 per cent annually for the next three years.
“At the beginning of last year, our manpower cost was RM1.2 billion per year, of which 55 per cent was for fixed pay and the remaining was for variable pay (overtime allowances, medical, travel and entertainment, etc).”
He said in September last year, it had reduced its manpower by 8.5 per cent to 17,146 from 18,742 workers.
On the disposal of non-core assets and underperforming joint ventures, Azhar said RM129 million of the targeted RM350 million had been divested in November last year. In terms of plugging procurement leaks, he said FGV had recorded procurement savings of between RM155 million and RM170 million.
He said FGV targets to achieve 50,000 tonnes of feed production and launch two new premium feed formulation for dairy cattle this year.
The group also aims to reach annual revenue of RM200 million to RM300 million for its renewable energy division from the waste it produces during the milling process.