FGV to sell RM350m worth of non-core businesses, assets

This article first appeared in The Edge Financial Daily, on January 15, 2019.
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KUALA LUMPUR: FGV Holdings Bhd has identified several non-core businesses and assets worth RM350 million for disposal, said its chairman Datuk Wira Azhar Abdul Hamid.

In his letter to shareholders filed with Bursa Malaysia yesterday, Azhar said FGV has also identified several areas for the development of strategic alliances or partnerships to capitalise on its strengths and plug capacity gaps where there are any. However, he said detailed announcements will only be made at the appropriate time. Azhar also pointed out that some of FGV’s joint ventures are underperforming and have not brought optimal benefits to the group. “These are also being reviewed and announcements will be made as required,” he said.

Additionally, Azhar said the proceeds from FGV’s listing had whittled away and not all of it was invested wisely. “The depletion of FGV’s financial resources was evident when in the third quarter of 2018, FGV impaired a total of RM788 million. In other words, we have taken the hit and can now decide how best to extract some value from some of these assets and investments,” he said.

Azhar also noted that the culture in FGV is not consistent with a progressive and dynamic organisation; and the people were not performance-centric. “We will strive to develop a performance-oriented culture that will enable FGV to compete in the market place and take its place among its peers. We have identified the human resource gaps and priorities and a people-building programme will be put in place,” he said.

Azhar said the group takes cognisance of the ongoing uncertainty over the land lease agreement (LLA) that is affecting market perception and needs to be resolved immediately. “The agreement to lease land in relation to the LLA was signed between the Federal Land Development Authority and FGV in November 2011. FGV has paid a total of RM2 billion from 2012 to 2017 for the leased land.

“FGV has always met all its obligations under the LLA contrary to what has been reported in the past. FGV has also invested billions to replant and rehabilitate the old LLA estates,” he said.

On FGV being accused of labour abuses and human rights violations by the Roundtable on Sustainable Palm Oil (RSPO), Azhar said this was a result of more than 40 gaps identified by the RSPO’s audit team, which he deemed as “both unacceptable and shocking”.

“Urgent steps were immediately taken to address the issues at hand. The RSPO published its report on FGV on Nov 28, 2018. Since then, FGV has taken several steps to address the various issues identified in the report. Of the 41 issues, FGV has already addressed some ahead of schedule,” he said. “We expect to correct all charges in respect of human rights abuses and violations well within the given deadline,” he added.