KUALA LUMPUR (Jan 8): The worst is behind us, FGV Holdings Bhd chairman Datuk Wira Azhar Abdul Hamid said, noting that the group is on the "right path towards a new and far better future".
"There are still a couple of lingering challenges with our subsidiary, MSM Malaysia Holdings Bhd, but there are plans underway to address each and every one of them, sooner rather than later," he said in his third letter to shareholders posted on Bursa Malaysia today.
He added that the board of directors intends to transform FGV into an organisation that is not wholly dependent on crude palm oil (CPO) price for its performance.
"In the future, FGV will be repositioned as a major player in the agriculture and food industries. While palm oil will remain a mainstay of our business, we will also deliberately and carefully redeploy appropriate resources into higher value and synergistic sectors to mitigate against the risk of CPO price fluctuations."
In the seven-page letter, Azhar also noted that there is still some way to go to rightsize FGV’s manpower cost. As at September 2019, it has cut its manpower numbers by 8.5% to 17,146 from 18,742 people.
"We had set a target to reduce manpower cost by 10% annually for the next three years, in recognition of the fact that the variable component of pay was unusually high.
"The change in culture too is happening – slower than I would like, admittedly, but still it is heartening to be able to see some change. Today, there is a far greater sense of accountability and awareness of integrity and governance," he said, adding that the board is aware of the next steps that must be taken to ensure that the group is supported by the right people to take it forward.
On disposal of non-core assets, Azhar said he is unable to reveal any details for now.
"I will say this much, there are several ongoing discussions and we will make the necessary announcements at the right time."
For 2020, he said the target is to achieve 50,000 tonnes of feed production and launch two new premium feed formulation for dairy cattle.
The group is also aiming to reach an annual revenue of around RM200 million to RM300 million for its renewable energy division as it further unlocks the value of waste it produces as part of its daily milling process.
“The assurance you will get from me is, every plan has been challenged and scrutinised thoroughly, and there is no reason why FGV cannot succeed in all of these ventures,” he said.
He also reassured that the strategic diversification will benefit all its stakeholders, especially the 112,635 smallholders whom FGV regards as partners and with whom it shares a symbiotic relationship with.
At 3pm, shares in FGV were down 4 sen or 2.65% at RM1.47 today, bringing a market capitalisation of RM5.36 billion. Its share price has more than doubled over the past year.