KUALA LUMPUR: After a challenging and tumultuous 2016, Felda Global Ventures Holdings Bhd (FGV) plans to become a leaner and stronger organisation this year, riding on improved plantation performance and higher commodity prices.
“We are upbeat as the industry looks forward to better commodity market sentiments in light of lower palm oil inventory levels, improving export demand, a moratorium on new plantings in Indonesia and recovery in crude oil prices,” said FGV group president and chief executive officer Datuk Zakaria Arshad in a statement yesterday.
He said FGV’s strategy would revolve around three main thrusts — business rationalisation to make the organisation leaner; drive for operational excellence; and selective external growth — all to be executed under uncompromising governance and transparency standards.
Zakaria said FGV’s group-wide business rationalisation plan had been accepted in principle by the board for immediate implementation. This entails restructuring, divesting or collaborating with another player for the assets and investments that have been dragging its profitability.
“FGV is reviewing its organisation structure and business model to achieve better reporting alignment and accountability, mitigation against commodity and currency volatility as well as closer oversight on associated businesses,” he added.
Zakaria said FGV’s focus remained on improving core business performance through leading edge plantation management, best-in-class agronomic practices, intensified replanting as well as mechanisation to improve yields.
“As for the downstream, we shall intensify efforts to develop destination and consumers market either through organic expansion, marketing agents or strategic partnership with local players.
“FGV has been operating under high administration cost structure previously and last year recorded substantial reduction of this cost by more than RM100 million subjected to audit adjustments.
“Our lean administration cost is now a culture and management regimen in FGV — to be able to do more with less,” he said.
Zakaria said a holistic review of joint-venture terms with key strategic partners was underway to fully realise the win-win partnership aspirations that would translate into greater values for FGV.
"This review will ensure, among others, equitable power-sharing at operational and corporate levels, joint products and market development, roadmap on technology transfer as well as providing exposures to our human capital in global environment,” he said.
Zakaria, who recently marked his ninth month in office, said last year proved to be a tumultuous year that saw the share price climb from a low of RM1.33 to a high of RM2.50 before settling at RM1.55 by year-end.
This occurred despite the comprehensive improvement efforts made as outlined in the transition plan, which primarily involved strengthening core business, sweating existing assets and putting merger and acquisition on the backseat.
On Eagle High Plantation (EHP) in Indonesia, Zakaria said market optimism developed over the first few months of his stewardship but had been affected by uncertainties over EHP acquisition plan since June 2015.
“Now that FGV has signed the Termination Agreement with Rajawali Group on December 23, the matter has been concluded. The investment is now undertaken by FIC Properties Sdn Bhd, a Felda entity,” he said.
As for the Felda Iffco Gida Sanayi, Turkey, he said the financial losses were under forensic audit and FGV was awaiting the official report before taking any further action.
Zakaria believes that the worst was behind him and was ready to lead the team in bringing FGV to greater heights and delivering the expected shareholders return this year.