FGV to focus on transformation plan

: FGV Holdings Bhd, which slipped into the red in the fourth quarter ended Dec 31, 2018, will be focusing on its transformation plans this year to return to the black, said group newly appointed CEO Datuk Haris Fadzilah Hassan.

Speaking at a press conference today, Haris said the group is planning to divest its non-core and non-performing assets with expected proceeds of RM350 million and rationalise up to six palm oil mills starting this year until year 2021 to improve utilisation.

“We have 68 mills (currently) and we are looking about (rationalising) two mills per year. It could be closing some of this less efficient plant with smaller capacity so that we can have better output growth,” he added.

On its replanting and age profile initiatives, Haris said the group will continue replanting at average of 15,000ha in 2019 with replanting cost approximately RM300 million per year.

He said this plan should continue until it achieves normalised age profile of 12 years by 2026, from 14.3 years currently.

Asked to comment on claims that the group will be delisted, Haris responded by saying that he prefers to focus on the group’s transformation and turnaround activities to maximise returns to the shareholders.

“I am not in the position to comment (on the issue) because this is subject to what the government and the stakeholders want to do. But I think there is a lot of potential in FGV,” he said.

For 2019, the group expects the CPO price to hover between RM2,000-2,500 per metric ton (MT) and targeting average CPO production cost (ex-mill) at RM1,469 per tonne.

FGV posted a net loss of RM208.8 million for the fourth quarter ended Dec 31, 2018 (Q4 2018), against a net profit of RM50.44 million in the previous corresponding quarter.

FGV said the results were largely hit by impairments and lower average CPO price realised of RM2,282 per metric tonne (MT) for the year.

For the quarter under review, the CPO price averaged at RM2,053 per MT, 24.6% lower RM2,723 per MT for Q4 2017.

Revenue for the quarter declined 24% to RM3.23 billion, from RM4.26 billion in the same quarter in 2017.

Asked whether there will be more impairments in the current , Haris said he does not foresee any major impairments going forward, noting that the group has been taking prudent steps on its investments.

“The big ones is over. I think we have taken a lot of impairments last year. This is probably one of the milestone in the history. I don’t think there will be impairments of this size in the future,” he added.

For the whole of 2018, FGV registered a net loss of RM1.08 billion, from a net profit of RM130.93 million, while revenue decreased 20.4% to RM13.47 billion from RM16.92 billion previously.

Source: The Sun Daily

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