Dividends unlikely as FGV reports 1st-ever annual loss

FGV is mired in delisting rumours after its shares fell to penny stock territory


The world’s largest crude palm oil (CPO) producer, FGV Holdings Bhd, may not declare any dividend for its financial year ended Dec 31, 2018 (FY18), after the company posted a net loss of RM1.07 billion for the year, the worst since the firm went public in 2012.

The FY18 net loss reversed from the RM130.93 million net profit posted in FY17. Revenue for FY18 also fell to RM13.47 billion from RM16.92 billion in the previous year.

Loss per share for FY18 stood at -29.6 sen per share, compared to earnings per share of 3.6 sen in FY17.

FGV’s final quarter of FY18 (4Q18) also registered a net loss of RM208.8 million from a net profit of RM50.44 million, as the government-linked planter continues to be dampened by low revenues, impairments and low CPO prices.

Revenue in 4Q18 was down 24% year-on-year to RM3.23 billion from RM4.26 billion in 4Q17, mainly on lower CPO prices.

FGV’s new group CEO Datuk Haris Fadzilah Hassan said given the devastating results, the planter may miss paying dividends to shareholders this year.

The Federal Land Development Authority (Felda) owns a 23% stake, while Koperasi Permodalan Felda Malaysia Bhd controls about 5.25% in FGV.

“All I can say is, it is an unusual time. This is also the first time that we have impairments that size, so I think (we have) to be realistic.

“It has not been decided if we will pay dividends or not. But looking at the financial results, to be honest, I think it will be quite difficult for the company,” Haris told a media conference in Kuala Lumpur (KL) yesterday.

The planter’s fortunes have gone south since its listing as the world’s second-largest initial public offering (IPO) in 2012. In the first year after its listing, the company paid 16 sen in dividends to its shareholders.

Thereafter, it 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.

FGV has also been mired in rumours of a delisting, after its shares slumped to penny stock territory late last year.

FGV’s shares hit a record low of 64 sen in December 2018, a far cry from its IPO reference price of RM4.55. Its shares have since recovered to hit a threemonth high of RM1.29 last week, before pulling back to close at RM1.12 yesterday.

Commenting on this, Haris said the decision to delist the company is under the purview of the government and other stakeholders.

“I’m not in a position to comment because this is subjected to what the government and other stakeholders want to do — but there is a lot of potential in FGV.

“I prefer to focus on the transformation activities that we are doing and let the stakeholders decide what they want to do,” he said.

Over the last 12 months, FGV has set some of its twoyear turnaround plan into motion. This includes the replanting of some 13,000ha of area, the shifting of its headquarters to Wisma FGV in Jalan Raja Laut, KL, and reducing its headcount by more than 600 employees.

The company’s replanting efforts have seen its age profile improve to 14.3 years in 2018 from 14.8 years in 2017, while its relocation and downsizing moves have resulted in total annual savings of RM37 million.

Haris said these pursuits will continue to be carried out throughout the year until FGV hits “the right number” to be productive. He added that the turnaround plan also includes a strategy to divest some RM350 million worth of noncore and non-performing assets.

“These efforts are ongoing. There are many companies that we have set as a target to put on the market. We are talking to several companies and hopefully, once some of these deals have materialised, we will share more information,” Haris said.

One of the assets being considered for disposal is the 4,453.96ha parcel of land in Chuping, Perlis, managed by its subsidiary MSM Malaysia Holdings Bhd.

FGV said the land is not strategically located with any of the group’s current operations. The company hopes to sell the land in this quarter.