PASIR GUDANG (Jan 13): FGV Holdings Bhd is targeting capital expenditure (capex) of more than RM1 billion for the financial year ending Dec 31, 2023 (FY2023), which would be the plantation giant's largest annual capex to date.
"About RM400 million will be used for the replanting of old oil palm trees. A lot of machinery, seedlings and other items are needed for replanting.
"The rest [of the capex] will be used for asset replacement to improve efficiency and meet regulatory requirements," said FGV chief financial officer Datuk Mohd Hairul Abdul Hamid.
He said this during a media visit to FGV’s subsidiary Delima Oil Products Sdn Bhd in Pasir Gudang, Johor Bahru on Thursday (Jan 12).
As at the end of September 2022, FGV had spent nearly RM500 million on investments. "By year-end 2022, capex should have reached RM600 million to RM700 million," said Mohd Hairul.
In comparison, FGV spent RM471.65 million capex in 2020, and RM614.75 million capex in 2021.
Meanwhile, FGV chief executive officer Datuk Nazrul Mansor commented on the group's outlook, and expressed optimism that its consumer product business, such as refined edible oil and margarine, will continue to expand and grow in the domestic market.
"We aspire to be a Malaysian food company. In every household kitchen in Malaysia, at least 50% of the products are made up of our products, half of which are of the Saji brand," he added.
FGV is close to achieving 12% sales growth in 2022 on two products — the refined cooking oil product Saji and margarine product Seri Pelangi.
Asked if China's reopening will mitigate downside risks in the plantation sector, Nazrul said, "This will benefit the group as the supply of crude oil gradually runs out."
At the time of writing on Friday, FGV’s share price was unchanged at RM1.33, valuing the group at RM4.85 billion.