President and chief executive officer Datuk Mohd Emir Mavani Abdullah(pic) is under pressure after the group’s market value has been halved since it went public in 2012 amid a decline in commodity prices. In a statement yesterday, Emir said the group was planning to consolidate and divest some of its non-core businesses and non-performing assets to strengthen its business structure. However, he did not elaborate.

25/02/2015 (The Star) - Felda Global Ventures Holdings Bhd (FGV) said net profit for the fourth quarter ended Dec 31, 2014 plunged 96% to RM20.21mil from a year ago as operating income declined while administrative and operating cost jumped.

Analysts had already expected a weak quarter for the group, following the recent flooding in the East Coast of the country that had affected palm oil production at several estates. The company is also expected to take some losses related to the acquisition of London-listed Asian Plantations Ltd (APL).

The sharp drop in the last quarter dragged down FGV’s full-year net earnings to RM306.4mil, or 69% lower compared with the net profit of RM982.2mil made a year ago.

The results came in line with CIMB Research’s lowered forecast.

President and chief executive officer Datuk Mohd Emir Mavani Abdullah is under pressure after the group’s market value has been halved since it went public in 2012 amid a decline in commodity prices.

In a statement yesterday, Emir said the group was planning to consolidate and divest some of its non-core businesses and non-performing assets to strengthen its business structure. However, he did not elaborate.

But low crude oil prices, the weakening ringgit against the US dollar and uncertainties over the direction of crude palm oil (CPO) prices mean 2015 will be another tough year for FGV.

“The cold season may hamper CPO demand in the short term, but CPO will be back in demand in the traditional markets such as Pakistan, India, China and the European Union once the warmer season and festive season kicks in,” he said in the statement.

FGV’s core plantation segment registered a 39.5% reduction in profit due to the land lease agreement (LLA) fair value charge of RM172.84mil in 2014, compared with a gain of RM494.49mil in 2013.

Excluding the LLA effect, the segment’s result would be higher at RM877.4mil, compared with RM669.7mil in 2013.

The group has proposed a final dividend of four sen per share, bringing the full-year dividend to 10 sen per share, compared with 16 sen per share in 2013.

Revenue rose 30.8% to RM16.4bil from RM12.6bil in the preceding year, driven by the full-year effects of Felda Holdings Bhd’s (FHB) consolidation into FGV.

FGV also realised a higher average CPO price of RM2,410 per tonne and an oil extraction rate (OER) of 21.01% in 2014, compared with the RM2,333 per tonne and 20.44% OER of 2013.

As reported earlier, one of the main reasons for the revenue growth was attributed to FHB being fully consolidated into FGV’s financial performance. “Through this, FGV has obtained operational efficiencies as well as synergies within the plantation value chain of the FGV group,” Emir said.

“Our ability to drive operational improvements and efficiencies, as well as reduce operational costs at the plantation sites have enabled us to remain resilient and achieve a satisfactory performance, amid the ever-changing market conditions,” he added.

On upstream performance, the group has continued with its aggressive replanting efforts to correct its age profile during the year in review, causing a decline in the CPO production volume and fresh fruit bunches (FFB) processed.

“FGV’s FFB production will further improve in the coming years when a more balanced age profile of trees is achieved, with a target of 60% prime palm by 2020,” Emir explained.

Meanwhile, the group’s sugar business segment registered a decline of 3.7% in profit to RM372.96mil, while the downstream segment’s losses widened to RM125.2mil in 2014 from RM52.5mil in 2013 due mainly to a lower crush margin from the group’s Canadian business.

FGV’s trading, logistics, marketing and others business segment also saw a decline in profit by 4.3%, while its other businesses saw earnings fall 36% due to the lower sales volume of compound fertilisers and decline in rubber prices.

In line with the aspirations of the strategic blueprint, Emir said FGV would continue to chart new milestones with the incorporation of its two new companies, namely, PT Bumi Agro Nusantara, an entity based in Indonesia, and FGV Trading Sdn Bhd (FGVT), a trading and marketing arm of FGV under the new enhanced business model.

“While the incorporation of PT Bumi Agro Nusantara is part of our upstream expansion, FGVT plays an important role in streamlining our internal palm value chain via the tolling mechanism. With refineries and mills focusing on efficiency and cost savings, our trading arm will focus on the trading of physical palm oil-related products, the majority of which are produced by our group,” he explained, adding that the two companies were expected to contribute towards FGV’s performance this year.