KUALA LUMPUR (Nov 28): FGV Holdings Bhd, which undertook its biggest impairment from the 2014 acquisition of London-listed Asian Plantation Ltd (APL) in the third quarter ended Sept 30, 2018 (3QFY18) and embarked on legal action against 14 former directors recently, has moved into recovery mode, its chairman and interim chief executive officer (CEO) Datuk Wira Azhar Abdul Hamid said.

Likening the loss-making plantation giant's conditions to a patient undergoing a heart bypass, Azhar said it has "cleared the blockages" and is now "closing up the stitches".

"Hopefully, the 'patient' can recover and run around in (good) health soon," he told a news conference to announce the group's financial results for the third quarter ended Sept 30, 2018 (3QFY18) today.

On Nov 23, FGV sued its former group president and CEO Datuk Mohd Emir Mavani Abdullah, former chairman Tan Sri Isa Samad and 12 others for RM514 million and other damages in relation to the acquisition of APL in 2014.

Azhar said the group will file one or two more suits in relation to its subsidiaries that are currently under investigation by the end of the year, but declined to elaborate.

"We have done the big one (impairment of) APL, which is being taken through the legal process currently. For the others, you should be hearing the same for one or two more before the year ends.

"I'd rather not name names. We will announce it at the right time," he added.

Azhar said the RM514 million claim is based on the group's loss from the acquisition of APL, which was independently verified by valuers.

While it would have been ideal for the impairment to be carried out earlier, he said the group wanted to be sure of its financial position.

"We wanted to be sure, which is why we carried out all the investigative work. We are relatively sure of the numbers now and have chosen this quarter to put the impairments through. The biggest one, APL, has been finalised and confirmed," he said.

But he assured that the worst of the impairments is over.

FGV widened its net loss to RM849.26 million in 3QFY18 from RM23.23 million in 2QFY18 versus a net profit of RM41.53 million a year ago, mainly due to impairment amounting to RM788 million, with APL accounting for 65% of the impairment for the current quarter.

The group's quarterly performance was also dragged down by the plantation sector, which incurred a loss of RM849.8 million in 3QFY18 compared with a profit of RM132.4 million a year ago.

FGV attributed the poorer performance to lower average crude palm oil (CPO) price realised, impairments of intangible assets of RM562 million and property, plant and equipment of RM124 million.

The group saw higher share of losses from joint venture companies amounting to RM60 million in 3QFY18. These factors were compounded by weak margins in the research and development division and lower sales volume of fertiliser.

As a result, FGV reported a loss per share of 23.3 sen for 3QFY18 compared with earnings per share of 1.1 sen for 3QFY17.

Quarterly revenue also declined 22.9% to RM3.19 billion in 3QFY18 from RM4.14 billion a year ago.

For the cumulative nine months (9MFY18), the group posted a net loss of RM871.15 million compared with a net profit of RM80.49 million a year ago, while revenue fell 19.2% to RM10.23 billion from RM12.67 billion in 9MFY17.

Asked if FGV would be able to weather through prolonged weak CPO prices given its current financial situation, Azhar said it will focus on rationalising its costs via the improvement initiatives that are already in place.

FGV is expecting CPO prices to be between RM1,900 and RM2,100 per tonne for 2019, with Azhar saying that he does not expect any significant improvement in CPO prices based on the current outlook of demand and supply.

Nevertheless, he does not expect low CPO prices to significantly affect the group's financial performance going forward.

"Although we have taken a big hit from a profit perspective, we are still doing okay from a cash perspective. Our cash flow should still be good and to me, that is more important.

"We are confident (of recovery for FGV). We know the issues we are facing and we are addressing them. We are already seeing some improvements with the initiatives we are taking," he said.

FGV's deposits, cash and bank balances stood at RM1.48 billion as at Sept 30, 2018.

On the appointment of a new CEO for FGV, Azhar said the group should be making an announcement by end-January 2019, adding that there will also be a new CFO, possibly before the appointment of its CEO.

FGV shares closed down 8.5 sen or 8.5% at 91.5 sen today, with 22.35 million shares done, bringing it a market capitalisation of RM3.36 billion.