Felda global share volatility due to CPO prices
Published on: Wednesday, March 04, 2015
Kuala Lumpur: The volatility in the share price of Felda Global Ventures Holdings Bhd (FGV) is a reflection of crude palm oil (CPO) prices and not purely based on the firm's financial standing.Group president and chief executive officer Datuk Mohd Emir Mavani Abdullah said as FGV is solely a plantation company, its share price moved relatively closely to that of CPO."The company's profit is in fact rising," he added, in response to a question on the recent slight drop in FGV's share price.
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Mohd Emir was speaking on the sidelines of the Palm & Lauric Oils Conference and Exhibition (POC) here, Tuesday.Internally, FGV is focusing on improving productivity and yield, across all its plantations."Our oil extraction rate has improved by 0.1 per cent," Mohd Emir said, adding, FGV is also on track to achieve RM100 billion revenue by 2020.As to how the remaining 10 per cent of its listing proceeds is being used, he said it would be utilised to grow the upstream segment.
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On the Land Lease Agreement (LLA) which is said to have complicated the company's fair value accounting, subsequently impacting profit in the recent financial year results, Mohd Emir said it was being reviewed."We are reviewing to ensure there is more predictability in the LLA as the concern is over fluctuations in the agreement.
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"We are very unique in being the only plantation company to have the LLA in our system. If you look at it, plantations are a long-term business and we believe FGV is one of the best in the region."We are currently in discussions with our counterparts in Felda (Holdings Bhd) on getting a good mechanism for the LLA," he added.Mohd Emir hopes the discussion can be concluded by the first half of this year.FGV is also going on roadshows to educate investors on its business, especially on the LLA, to restore confidence.Under the LLA, FGV had to pay Felda a fixed amount of RM250 million annually in cash for 20 years and a 15 per cent share of operating profit from the sale of fresh fruit bunches derived from the estate land leased from it.FGV's core plantation segment posted a 39.5 per cent lower profit due to the LLA fair value charge of RM172.84 million last year from a gain of RM494.49 million in 2013.Stay up-to-date by following Daily Express’s Telegram channel.
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