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Felda still mum on notice of LLA termination: FGV

KUALA LUMPUR: FGV Holdings Bhd still has not heard officially from Federal Land Development Authority (Felda) on the termination of their land lease agreement (LLA).

FGV group chief executive officer Datuk Haris Fadzilah Hassan said Felda had also not informed its interest to take over the company’s palm oil mills on the LLA land.

The LLA, said Haris Fadzilah, only governed about 350,000 hectares that are currently on a 99-year lease to FGV, and not the company’s mills.

“We have written to Felda to say that if there is any further development on this issue, we will make a joint statement. But as of now, we have not received the official notice with regards to the LLA,” he said at a briefing on FGV’s interim results today.

FGV previously said it would start the process of terminating the LLA once it received an official notice from Felda on the matter.

It also noted that the compensation due to the company could be between RM3.5 billion and RM4.3 billion.

This followed the announcement on October 28 by Minister in the Prime Minister’s Department (Economy) Datuk Seri Mustapa Mohamed that the Cabinet had agreed to the recommendation from the special task force on Felda to terminate the LLA.

Haris Fadzilah said any interest on the mills would have to be taken on a commercial basis, adding that FGV would accept an offer on a willing seller-willing buyer basis.

On the value of the mills, he said a new mill built today would roughly cost about RM1 million per tonne of capacity.

FGV has a total of 68 mills which produce about three million tonnes of crude palm oil (CPO) annually.

“We have about 68 mills, which is key to our business. The LLA land only represents an estimated 30 per cent of the fresh fruit bunches (FFB) that our mills process, another 30 per cent of the FFB comes from settlers and third-party suppliers.

“Even without the LLA land, we still need the mills to process the remaining 70 per cent of the FFB. It is a very critical part of FGV’s capabilities, in terms of processing the FFB as well as for the further downstream markets,” he said.

FGV posted a net profit of RM136.89 million in the third quarter (Q3) ended September 30, 2020 from a net loss of RM262.41 million recorded in the same quarter last year.

This is the second consecutive quarter of positive results for FGV after losses in Q1.

FGV’s revenue in Q3 increased 12.4 per cent to RM3.99 billion from RM3.55 billion.

The company attributed the improved performance to higher CPO price and lower losses in the sugar sector.

CPO price averaged RM2,645 per tonne during the quarter, higher than the average RM1,983 per tonne in Q3 of 2019.

For the nine-month period, FGV’s net profit stood at RM15.09 million against a net loss of RM317.98 million a year ago, while revenue eased 0.4 per cent to RM10.07 billion from RM10.1 billion.

Meanwhile, Haris Fadzilah said FGV was studying the proposal by Tan Sri Syed Mokhtar Albukhary-owned Perspective Land (M) Sdn Bhd’s offer to inject plantation assets in exchange for a sizeable stake in the company.

He, however, said the offer did not include Perspective Lane’s subsidiary Central Sugars Refinery Sdn Bhd (CSR).

“We are in the process of determining the assets (that could be injected into) and does not include CSR injection into FGV,” he said.

On its ongoing divestment of non-core assets, he said FGV was looking to finalise at least two more this year, apart from FGV Cambridge Nanosystems Ltd.

“We hope to complete it by this year but we will see how best to finalise that and will make the necessary announcements, once completed,” he added.

Source: NST