24September2020

Agenda Daily

FGV to unveil new game plan

In a move designed to cope with the changing sectorial landscape, Felda Global Ventures Holdings Bhd (FGV) is expected to unveil its new long-term strategic plan.

It will spell out details on the group’s commitment to stay focused in the vegetable oils market, measures to reduce operating cost and the listing of its logistics arm.

According to group president and chief executive officer Datuk Zakaria Arshad, the plan will address measures that FGV needs to take for the next three years for it to reach its 2020 goals and to place the company on an able footing to stay ahead of the competition beyond then.

“The group’s existing strategic plan needs an overhaul to cater to the challenges in the current business and economic environment. It is our long-term strategic plan to ensure FGV stays ahead of the competition even beyond 2020,” he told StarBiz in a recent interview.

To recap, the FGV Global Strategic Blueprint (2012-2020) was first undertaken by a foreign consultant prior to FGV’s listing exercise on June 2012 spearheaded by the late Tan Sri Sabri Ahmad.

It was initially meant to pave the way for FGV to expand its reach in the region through mergers and acquisitions (M&As) to secure the group’s growth prospects.

Sabri’s successor Datuk Mohd Emir Mavani Abdullah streamlined the plan and reorganised the group into its main business clusters namely palm upstream and downstream, sugar, rubber and others.

During the tenure of Emir Mavani, who was first appointed to the board of FGV on Jan 1, 2013 and later made the CEO, FGV completed seven acquisitions costing some RM4bil. FGV’s cash pile which stood at RM5.03bil as at end-2013 came down by half to RM2.5bil as at the end of 2015.

Zakaria who took over the helm of FGV from Emir seven months ago saw the need for the existing strategic plan to be further defined.

Some of the major changes include the group’s new approach towards M&As either in new oil palm or sugar plantations, focusing on improving the efficiency and productivity of existing estates and mills, replanting programmes and further cost cutting measures by selling off its non-core assets.

“In sugar, we will halt our earlier plan to acquire land for sugar cane planting and continue buying raw sugar supply for our refining activities,” said Zakaria.

He said FGV still intended to list its logistics arm.

FGV will look at increasing its FFB yields to 6 million tonnes by 2020 from 4.1 million tonnes currently.

He also expected the overhauls under the new plan to better position FGV by 2020 and beyond. FGV is poised to be a global leader in palm, top three global player in rubber and sugar as well as the top three global player in industrial fats.

Zakaria hoped that when the revised strategic plan is disclosed in full, it would dispel the lingering negative sentiments hovering over the stock that have contributed to FGV’s share price falling below RM2 after its steady climb three months ago.

The reports include speculative news items of the Government considering the formation of a steering committee above the FGV board, which the company has denied vehemently. FGV is also persistently associated with a possible acquisition of a stake in Eagle High Plantations from the Rajawali Group, a deal which the company has aborted.

The other area that Zakaria is battling with is issues regarding the group’s FFB yields, which the CEO has said was improving.

“It is difficult to stop such negative news flow, which the markets have been talking about,” said Zakaria.

“We have denied everything with regard to the steering committee. However, many investors are still sceptical saying that this suggest the Government is considering a more active role in public-listed FGV,” he added. The baseless report saw FGV share price falling below RM2 now from its high at RM2.50 this year on Sept 22.

On Friday, the stock firmed up one sen to settle at RM1.93.

Meanwhile, anticipation is also building up over the release of FGV’s third quarter results expected to be out by the end of the month.

Zakaria had in May expressed confidence that the group’s full-year 2016 financial results will be better compared with last year due to the cost-cutting measures.-7/11/2016

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