KUALA LUMPUR (Feb 26): FGV Holdings Bhd (KL:FGV) expects its oleochemical segment to see improved sales volume this year as raw material costs stabilise, said group chief executive officer Fakhrunniam Othman.

FGV’s oleochemical segment, part of its downstream division, produces a range of palm oil-derived products — including methyl ester, fatty acid cuts, fatty alcohol cuts, and glycerin — widely used in soaps, cosmetics, candles, biofuels, and industrial applications such as lubricating greases, tinplate processing, and iron plate coatings.

According to its 2023 annual report, FGV’s oleochemical sales volume declined to 263 million pounds (lbs) in 2023, down from 282 million lbs in 2022 and 326 million lbs in 2021 as general slowdown in market demand impacted sales.

“We also faced challenges last year [2024] due to rising raw material costs. However, we anticipate a recovery this year as prices stabilise. We are also implementing measures to improve efficiency and lower costs, despite geopolitical uncertainties,” Fakhrunniam told The Edge on the sidelines of the Palm and Lauric Oils Price Outlook Conference and Exhibition, hosted by Bursa Malaysia, on Wednesday.

To mitigate cost pressures, FGV is adopting several strategies, including optimising hedging mechanisms to manage price volatility in raw materials, expanding distribution channels to drive sales volume and enhance market reach, and engaging industry stakeholders and government agencies to develop collaborative solutions for sustainable growth.

FGV owns and operates Twin Rivers Technologies in the US, one of North America’s largest oleochemical producers. The group also has a joint venture with Procter & Gamble (P&G), which supplies a range of cleaning and self-care products.

In Malaysia, its oleochemical operations are housed under Felda Vegetable Oil Products Sdn Bhd and Felda Procter & Gamble (FPG). FPG, a 50:50 joint venture between FGV and P&G, sources palm kernel oil from FGV to manufacture chemicals, fatty alcohols, methyl esters, and glycerin.

FGV is one of the biggest plantation companies in the world and accounts for 3% of global crude palm oil (CPO) supply. The company manages almost 439,000ha of plantation land, of which 350,000ha are leased from the Federal Land Development Authority.

When asked about CPO prices, Fakhrunniam projected an average price range of RM3,900 to RM4,200 per tonne by year-end, driven by an anticipated increase in production.

“As for FFB [fresh fruit bunches] production, we expect a year-on-year growth of around 5% to 6%,” he added.

Shares of FGV closed unchanged at RM1.13 on Wednesday, giving the group a market capitalisation of RM4.12 billion.