Tuesday 16 Jul 2024
main news image

KUALA LUMPUR (June 21): FGV Holdings Bhd is continuing its transformation plan, with the group yielding greater operational improvements.

In a letter to shareholders, FGV chairman Datuk Azhar Abdul Hamid said despite posting a net loss for the first quarter ended March 31 (1QFY19), the group is on track to achieve its targets for 2019.

As of May, the group's fresh fruit bunch (FFB) production stood at 1.82 million metric tonnes (MT) and is considered on track to reach its FFB production annual target of 4.79 million MT.

In terms of FFB yield, Azhar said that as of May, yields stood at 6.35 MT a hectare, with FGV on track to reach its yield target of 19.43 MT a hectare.

Meanwhile, the cost of production for crude palm oil (CPO) — excluding the mill — now stands at RM1,482 per MT, which is close to its RM1,469 per MT target.

As far as procurement savings are concerned, the group has saved RM60.7 million, which is equivalent to 40.5% of the savings target of RM150 million.

"We are also working to reduce the funding for long-term capital expenditure using short-term financing.

"This will result in more efficient capital management. We have put greater emphasis on improving FGV's working capital through better collection of trade debts, tighter credit terms and reducing inventory turnover days," said Azhar.

He added that during 1QFY19, the group had launched 42 key procurement initiatives (KPIs), and that to date the group has registered savings of RM32.7 million, 18.4% of which is in capital expenditure (capex) savings and 14.7% is considered operational expenditure (opex) savings, with the KPIs registering a 97.6% completion rate.

Azhar noted that specifically, the group had registered 17.9% cost saving in fertilisers due to rationalisation and price negotiations.

He added that the group is in discussions with joint venture partners to review commercial terms of existing agreements or potential for divestments.

Azhar continued by saying that two-thirds of the FFB processed at FGV's mills are outsourced from independent third parties and smallholders, which include Federal Land Development Authority (FELDA), and that the group is prepared to accelerate its downstream business should the need arise.

"Over the next few months, as corrective and transformational measures take root, FGV will start the process of reshaping itself to meet the challenges of a more competitive world," he said.

At 2:50pm, FGV's share price rose 4 sen or 3.51% to RM1.18, with 5.68 million shares traded, giving the group a market capitalisation of RM4.3 billion.

      Text Size