Non-palm oil sectors have started contributing to group’s earnings, says FGV

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KUALA LUMPUR (April 28): FGV Holdings Bhd is starting to earn new sources of revenue from sectors in the circular economy and renewable energy industries, said its chairman Datuk Wira Azhar Abdul Hamid.

He said that while palm oil will remain a mainstay of FGV’s operations, the group has to look into sectors that it can quickly and easily move into to mitigate the vagaries of crude palm oil prices and offset its leasing bill.

“We are also paying close attention to potential adjacent businesses, leveraging on land that is not suitable for oil palm as well as areas that have not produced any fruit for the first three years following replanting.

“By planting cash crops that enjoy high demand locally and regionally, this creates an extra revenue stream for the group,” he said in his statement in the planter’s annual report for the financial year ended Dec 31, 2019 (FY19).

Azhar said FGV’s total landbank stands at 439,230ha, of which 351,000ha is leased from the Federal Land Development Authority (Felda).

The lease with Felda costs the group an additional RM248 million a year, plus 15% of plantation profit sharing.

Given that, Azhar stressed the need for the group to implement strategies that will reposition it as a major player in the agriculture and food industries.

“Ultimately, we will continue improving our operations, upskilling our staff, enhancing governance and practising sustainability.

“Our value creation story is a long-term one, and it is my hope that we will achieve all that we have set out to do.

“While the road ahead will be tougher than anyone of us expected, I believe FGV has shown its resilience and will get through these difficulties,” said Azhar.

The group reported a smaller net loss of RM242.19 million for FY19, compared with RM1.08 billion for FY18. Revenue dropped slightly to RM13.26 billion from RM13.46 billion, on the back of lower yields due to the lag effect from the prolonged dry weather and lower rainfall in late 2018 and early 2019.

The group has declared a final dividend of two sen per share for FY19.

FGV shares were down 2.27% or two sen at 86 sen at 3:16pm, giving the group a market capitalisation of RM3.14 billion. Some 3.34 million shares have been transacted.