by ALIFAH ZAINUDDIN / pic by MUHD AMIN NAHARUL
FGV Holdings Bhd is expected to reduce its management workforce by 30% over the span of three years as the plantation giant seeks to trim its costs, while optimising its assets as part of its extensive turnaround plan.
The world’s largest crude palm oil (CPO) producer is seeking to cut as many as 6,000 staff as part of its recovery plan after it recorded a massive RM1.07 billion loss for its financial year ended Dec 31, 2018 (FY18) — its worst since going public in 2012 — as a result of huge impairments and low CPO prices.
Sources told The Malaysian Reserve that the lay off will involve some 20,000 workers at its headquarters in Jalan Raja Laut, Kuala Lumpur (KL), and regional offices.
The termination process is ongoing with a total of 667 employees accepting FGV’s Mandatory Separation Scheme in 2018 alone.
The scheme involves a total payout of RM72 million and annual savings of RM25 million yearly. By June this year, about 500 more jobs will be cut, one source said.
The scale of the layoff is comparable to the job cuts carried out by flag carrier Malaysia Airlines Bhd (MAB) following two fatal disasters that rocked the airline five years ago.
The reduction in staff numbers at MAB was part of its RM6 billion turnaround strategy, which also involved plans to privatise the national carrier.
The troubled airline became completely state-owned after sovereign wealth fund Khazanah Nasional Bhd took 100% ownership.
While talks of taking FGV private point to a similar “rescue” pattern, sources said it is likely that FGV will continue to be a public-listed company, given that its problems are the result of a lack of integrity.
FGV’s new CEO Datuk Haris Fadzilah Hassan, who was appointed in January this year, has been given the mammoth task to re-invent the troubled planter which has been mired by legacy issues linked to its single-largest shareholder, the Federal Land Development Authority (Felda).
Allegations of corruption and mismanagement at Felda had prompted the listed entity to distance itself from the former by changing its name from Felda Global Ventures Holdings Bhd to FGV Holdings in June last year.
The company also opted to recruit several corporate figures in the past year, including Haris Fadzilah who previously served at Mass Rapid Transit Corp Sdn Bhd and Sime Darby Bhd, to fill up positions once held by politically-linked individuals.
Haris Fadzilah is FGV’s fifth CEO since its listing seven years ago.
Apart from reducing its headcount, the establishment of a new head office in Jalan Raja Laut from Menara Felda in Platinum Park, KL, is also part of the planter’s cost-cutting turnaround plan. It was reported that the rental of the new office is RM4.20 per sq ft cheaper than the old building.
FGV is also seeking to dispose of some of its non-performing assets, with Trurich Resources Sdn Bhd, its joint-venture company with pilgrim fund Lembaga Tabung Haji (TH), gaining interests of potential buyers.
Bloomberg recently reported that FGV and TH are working with an advisor to gauge potential buyer interest in Trurich Resources, which controls 42,000ha of oil palm estates in Kalimantan, Indonesia.
The report said the two parties are seeking to value Trurich Resources at as much as US$1 billion (RM4.13 billion) including debt. If successful, the deal will help FGV and TH offload assets that have been the subject of contention.