FGV says to remain high-performing company even without Felda land

FGV noted that it owns all its mills and refineries as they are not part of the LLA agreement and would remain with the plantation company. — Reuters pic
FGV noted that it owns all its mills and refineries as they are not part of the LLA agreement and would remain with the plantation company. — Reuters pic

KUALA LUMPUR, June 21 — FGV Holdings Bhd will remain on track to become a high performing company even if the other shareholders agree to return the land managed under the Land Lease Agreement (LLA) with parent company, Federal Land Development Authority (Felda).

FGV noted that it owns all its mills and refineries as they are not part of the LLA agreement and would remain with the plantation company.

“All our mills and refineries are strategically proximate with the land under the LLA. This means that for logistical and economic reasons, fresh fruit bunches (FFB) from the land under LLA will still have to be processed at FGV’s mills,” it said in a letter to shareholders filed with Bursa Malaysia today.

Two-thirds of the FFB processed at FGV’s mills are sourced from independent third parties and smallholders, including Felda settlers. Thus, consistency of supply is secure.

Additionally, the biggest cost components for FGV today are in its upstream operations, with staff costs amounting to RM998 million, fixed fee for the land under the LLA totalling RM248 million and around RM300 million in replanting cost.

To recap, FGV has a total landbank of 439,725 hectares (ha), out of which some 351,000ha are leased from Felda under the LLA.

The company has committed to paying its parent company RM248 million a year to lease this land, out of which 291,000ha are planted with oil palm. — Bernama