FGV to dispose of RM150m worth of assets

The group is in talks with the final 2 prospective buyers for Trurich Resources and 5 buyers for Asian Plantation


FGV Holdings Bhd will sell another RM150 million worth of non-core assets this year including the on going sale of Asian Plantations Ltd and Trurich Resources Sdn Bhd.

CEO Datuk Haris Fadzilah Hassan (picture) said both deals are expected to finalise by end of the year.

“About RM150 million or about five assets, out of the RM350 million non-core and non-performing assets that we intend to sell will be completed this year.

“We are in talks with the final two prospective buyers for Trurich Resources, which could be finalised very soon, and five buyers for Asian Plantations.

“Negotiations have been delayed due to the movement restrictions and we have started the process again,” he said in a press conference last Friday.

He added that with the disposals, about RM80 million of the group’s non-core assets remained for sale in 2021 following the RM120 million disposed last year.

Haris said for the financial year 2020 (FY20), FGV is banking on its plantation’s prime-age profile to raise fresh fruit bunches (FFB) production.

“We have been replanting about 15,000ha every year. For the first time this year, we have a higher percentage of young and prime trees.

“In 2012, our percentage of old trees was about 49% but now it has been brought down to 30%. This is an advantage to FGV,” he said.

Haris added that the group could save about RM150 million through better production management and centralised procurement.

During its first three quarters, the group’s FFB production fell 33% to 712,000 tonnes from 1.06 million tonnes last year.

The reduction has severely impacted its crude palm oil deliveries, which reduced by 33% to 514,000 tonnes from 762,000 tonnes.

For its replanting activities, FGV expects to spend about RM300 million to replant for 15,000ha of land each year.

FGV’s chairman Datuk Wira Azhar Abdul Hamid expects crude palm oil price to range between RM2,200 and RM2,400 for 2020.

Azhar said despite the better expectation in the second quarter 2020 (2Q20) due to the higher FFB production, FGV’s financial performance is expected to experience a “slight dip” this year due to the overall economic condition.

“Although the productivity numbers are up, we may end up with a slight dip towards year-end, but it is not a drastic drop as far as the productivity numbers are concerned.

“We are looking at recovery in 2Q20 and making sure all parts of our engine are working towards the numbers,” he said.

Azhar added that FGV is prudent with its turnaround initiatives and is trying to minimise the leakages found within the firm in meeting its target.

“We are quite confident in delivering the turnaround target and ensure that we are moving to a stronger platform,” he said.

FGV’s net loss widened to RM142.35 million in its 1Q20 from RM3.37 million a year ago as a result of falling FFB production and lower margins for palm oil and sugar.

Quarterly revenue dropped 15.05% to RM2.78 billion from RM3.28 billion, which the group attributed to bad weather conditions which impacted its estates, smallholders and third-party suppliers.


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