Tuesday, 30 August 2016
KUALA LUMPUR: Felda Global Ventures Holdings Bhd (FGV) plans to divest more non-core assets by the end of this year in an effort to monetise its long-standing investments and streamline core operations.
Among them is a strategic stake in AXA Affin General Insurance Bhd, which is held through FGV’s subsidiary, Felda Marketing Services Sdn Bhd, said the group’s chief executive officer Datuk Zakaria Arshad.
While he did not divulge the value of the investment, sources told StarBiz that the stake was valued at close to RM60mil.
“We are looking at two or three companies to divest. There are also some holdings that are not performing, we are considering those too.
“We are aiming to do the majority of it (the divestment) by this year or early next year at the latest,” he told reporters following the group’s second-quarter results briefing here yesterday.
Zakaria added that the group normally had a timeline of three years to evaluate its investments. However, he refused to disclose the targeted amount of funds to be raised from the planned divestments.
“We are actively looking to dispose of investments or companies that are not profitable.
“But I can confirm that we are in talks with potential buyers for the assets,” he said.
The non-core divestments are an essential component of the group’s bid to unlock the value of its holdings.
As part of FGV’s social mandate towards the Federal Land Development Authority’s 100,000 settlers, unlocking new funds will also allow it to maintain its stated dividend policy of 50% from its net income.
The planter returned to profitability for its second quarter ended June 30, 2016 (Q2’16) with a net profit of RM62.21mil, as its core upstream business was buoyed by higher crude palm oil (CPO) prices.
Turnover for the quarter was at RM4.13bil.
It is worth noting that the second-quarter earnings were only enough to offset losses recorded during Q1’16. For the preceding quarter, it had recorded a net loss of RM65.54mil. FGV has yet to declare a dividend for this year.
In 2015, the group netted more than RM600mil from the sale of its loss-making Canadian downstream unit Twin Rivers Technologies.
Zakaria added that achieving meaningful cost savings remains one of the group’s main targets.
“Our cost rationalisation plans are on track and I am very confident we can reach the RM100mil in savings mark this year,” he added.
As part of its crop replenishment exercise, the group said it is set to replant 16,000ha of land this year, although replanting plans during the first half of the year were put off by dry conditions arising from the El Nino weather phenomenon.
The group has cleared 14,000ha of landbank so far and has replanted about 2,307ha so far.
From an operational standpoint, FGV reported considerable improvements during the second quarter. Its fresh fruit bunch yield rose to 3.97 tonnes per hectare from 2.94 tonnes during the first quarter.
Meanwhile, total CPO production rose to 695,000 tonnes from 485,400 tonnes in Q1’16. Excluding mill and land lease agreement costs, its average CPO cost of production has gone down to RM1,669 per tonne from RM1,824 in the preceding quarter.
Source by: The Star Online