BETTER FFB PRODUCTION AND DIVESTMENT REALISATION TO IMPROVE FGV'S Q2 PERFORMANCE

KUALA LUMPUR, May 28 -- FGV Holdings Bhd (FGV) expects to record a better performance in the second quarter (Q2) ending June 30, 2020 on the back of improving fresh fruit bunches (FFB) production and the realisation of monetary inflow from its eight divestments.

“We are quite confident for the Q2 as we will start to see improvements in regards of FFB production due to the improving (performance) and the impact of realisation regime will be back on stream,” group chief executive officer Datuk Haris Fadzilah Hassan said.

Factoring in the weather pattern nationwide and oil palm trees cyclical pattern, he said the company also hopes the remaining quarters production would be able to help FGV to catch up its target.

“While we face challenges in the first half of this year, we expect the situation to improve in the second half as a result of the rainfall pattern in Malaysia, which leads to a greater supply of crude palm oil.

“The target is 18.4 metric tonnes per hectare by year-end, a slight increase from last year’s of more than 17 metric tonnes per hectare,” he told reporters at the company’s Q1 2020 financial results press conference here today.

Haris Fadzilah said FGV has secured sales for June and July delivery from India, a major buyer of CPO, and additionally signed an agreement with a company based in India recently to further strengthen its participation in the food products market.

He said FGV would also continue to reap the realisation from the divestment of eight non-performing assets nationwide worth RM150 million.

He said out of the RM150 million divestment value, RM50 million has been received as of late last year.

On Q1 performance, Haris Fadzilah said FGV’s lower FFB production also came from smallholders and third-party suppliers which makes up 70 per cent of its supply chain.

He said for the financial year 2020, FGV is expected to mimic the 2019 financial year performance in terms of FFB and revenue.

“Pricing is also an issue that we’re looking at because last year the pricing was challenging while this year’s pricing was good but production was constrained and that is the problem that we’re facing,” he said.

For the first quarter ended March 31, 2020, FGV’s net loss widened to RM142.34 million from a net loss of RM3.37 million in the same quarter last year.

Revenue, meanwhile, declined to RM2.78 billion from RM3.27 billion in the preceding period.

In a filing with Bursa Malaysia today, FGV attributed the decline to dry weather, the COVID-19 pandemic impact on its operations, as well as lower sales following the closure of its five mills in Sabah.

On FGV’s sugar producer unit, MSM Malaysia Holdings Bhd, Haris Fadzilah said the company is still on the lookout for a strategic partner.

“It (strategic partnership) is something that FGV is on the lookout to add value to the shareholding, as well as the shareholders. We welcome any proposals in that respect and it is still not off the table,” he said.

He said although the effort has been slowed down a bit due to the movement control order amid COVID-19, there is still one party interested at the partnership.

“But before they come to that decision, they’re trying to import MSM volume to set up the market,” he added.

-- BERNAMA