FGV may miss shareholder dividends this year

However, the palm oil producer will meet its RM250m lease payment to Felda

By ALIFAH ZAINUDDIN / Pic By TMR File

FGV Holdings Bhd, the listed arm of the Federal Land Development Authority (Felda), may miss paying out shareholder dividends this year as the new management concentrates on putting its house in order.

FGV, the world’s largest crude palm oil (CPO) producer, has never missed paying up shareholder dividends, but after a year of crisis — which includes an internal investigation into dubious transactions — the company may not have the financials.

Chairman Datuk Azhar Abdul Hamid said FGV has not declared any dividend target for shareholders, 33% of whom are Felda settlers.

“Honestly, this year, we have not discussed it because our focus right now, as far as the board is concerned, is to make sure that we make a turnaround as quickly as possible, so that we can produce good financial numbers to present to our stakeholders and then decide on the dividends.

“Would you want a one sen dividend? That does not make a lot of sense. If that is the case, it is better not to give. That is my opinion, but some people may want it,” Azhar told The Malaysian Reserve in Kuala Lumpur yesterday.

Azhar, however, said FGV will not miss its annual land lease obligation to Felda amounting to RM250 million.

Its other obligations to the government agency include 15% of operating profit and shareholder dividends.“The RM250 million per annum, we will pay. We have not defaulted on it, nor have we delayed it. The thing we are concerned about is, we must also give 15% of the operating profit.

“We understand that Felda is not very happy today because we are not generating good numbers, so they are getting less. The other component that Felda will also be missing is the dividend. There is that possibility (of missing out on dividends) because we need to turn things around,” he said.

To date, about 335,000ha from Felda’s total landbank of 850,000ha are currently run by FGV under the land lease agreement signed in 2012.

It was reported last year that Felda may seek the return of its leased land to FGV on the possibility of extracting higher returns elsewhere. The proposal is said to be more costeffective compared to a privatisation exercise.

FGV’s fortune has gone south since its listing as the world’s second-largest IPO in 2012. In the first year after its listing, the company paid 16 sen in total dividend to its shareholders.

It later declared a dividend of 10 sen per share in 2014 and the figure dwindled to four sen and one sen respectively in the subsequent years. Last year, a dividend of five sen was paid out.