By Emmanuel Samarathisa

FGV Holdings Bhd plans to divest RM150 mil worth of non-core assets this year, after failing to meet its goal of RM350 mil last year. For 2019, the oil palm planter was only able to sell RM129 mil worth of non-core assets. 

FGV group CEO Datuk Haris Fadzilah Hassan said in a Feb 28 press conference that as the group was “not bleeding”, it did not emphasise too much on divestments last year. 

He added that FGV hoped to complete some of the non-core asset sales within the first quarter of this year. 

Meanwhile, Haris said the group was not looking to a “planned divestment” of its stake in MSM Malaysia Holdings Bhd. FGV owns about 51% of MSM.

He said the search for a strategic partner back then was due to overcapacity. But Haris noted that “things are getting better” for the sugar industry. Also MSM was no longer tied to the long-term sugar supply agreement which ended in December last year, he added.

“Prices are going up – it’s currently at 14 US cents per pound now. One of the issues that was affecting MSM was the long-term sugar supply agreement, which has ended.

“There is no real urgency in terms of getting a partner or divesting our stake in MSM,” Haris said.

But MSM still needed to deal with the issue of overcapacity, he added, noting that the sugar refiner would look into rationalising its production capacity. 

MSM CEO Datuk Khairil Anuar Aziz, who was also present during the briefing, said the supply of raw sugar was moving downwards and expected prices to range between 13 and 15 US cents this year.

Khairil Anuar said while overcapacity was a problem, MSM has been receiving overseas enquiries.

“We have 2.25 million metric tonnes of capacity, which exceeds the 1.6 million metric tonnes of Malaysian demand. However, I would like to emphasise that we are getting enquiries now, which is positive for MSM,” he said.

FGV returned to the black with a net profit of RM76 mil for its fourth quarter ended Dec 31, 2019 (4Q19) from a net loss of RM209 mil a year ago. 

Revenue, however, declined 2.4% to RM3.15 bil for the quarter under review from RM3.23 bil previously. 

As for the full year (FY19), FGV’s net loss narrowed to RM242 mil from RM1.08 bil in the previous year. 

Revenue for FY19 came in at RM13.26 bil, a touch lower than RM13.46 bil the previous year, although average crude palm oil price realised for FY19 declined 11% to RM2,021 per MT from RM2,282 per MT in FY18.

As for MSM, the group’s losses widened to RM40.27 mil for the fourth quarter ended Dec 31 (4Q19) compared to a net loss of RM10.35 mil. It also slipped into the red witth a full year’s loss of RM299.76 mil for FY19 as compared to a net profit of RM35.66 mil the year before. 

FGV’s shares closed 5.79% lower at RM1.14 while MSM’s shares closed 4.67% lower to 72 sen on Feb 28, 2020.

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