FGV to consolidate consumer brands under new fast moving consumer goods division

PETALING JAYA: FGV Holdings Bhd aims to consolidate all its consumer brands under its new fast moving consumer goods (FMCG) division, to be categorised into two segments – food and non-food – with the group focusing on building the brands and expanding its portfolio internationally, starting with Southeast Asia.

“Our dairy business has shown encouraging growth as we have been aggressively promoting and re-establishing Bright Cow products in the market. In additon, our farm in Negri Sembilan has been installed with a new automated milking system which has the capability to record the performance of individual cattle for precision monitoring,” FGV CEO Datuk Haris Fadzilah Hassan said.

The group is also looking at achieving a revenue of RM20 million for its animal feed business by the end of the financial year, as it ramps up some of its initiatives as part of its diversification strategy. As of July 31, 2020 FGV’s animal feed business generated a revenue of RM11.5 million.

“We are mindful that the nascent signs may not be sustainable due to the volatility in the global market and economies. However, we are upbeat on our plans and committed to the strategies in diversifying our revenue streams,” said Haris.

For the second quarter ended June 30, the group returned to profitability with a net profit of RM20.55 million, from a net loss of RM52.2 million reported in the corresponding quarter of the previous year due to an increase in the crude palm oil (CPO) price and narrowing losses in its sugar segment.

Revenue for the quarter saw a marginal increase of 0.5% to RM3.29 billion from RM3.28 billion reported previously.

For the cumulative period, FGV posted a net loss of RM121.80 million, a 2.2-fold increase from a net loss of RM55.57 million reported in the same period of the previous year. Revenue for the period fell 7.3% to RM6.08 billion from RM6.56 billion reported previously.

CPO prices averaged RM2,309 a tonne for second-quarter 2020 (Q2’20), which was 18% higher than the RM1,955 a tonne recorded for Q2’19.

According to its Bursa Malaysia filing, FGV’s plantation sector anticipates a stronger second half for this year, as its fresh fruit bunches (FFB) and CPO production across its operations normalised after a slow start earlier this year.

It explained that the demand for CPO is poised to recover as global markets open up from strict lockdowns in the first half of 2020.

However, the sugar sector expects conditions to remain challenging and will focus on its turnaround plan, product diversification and export markets. The group’s sugar segment narrowed its loss before tax to RM26 million, compared to a loss of RM53 million in Q2’19, due to better industry average selling prices and improved poduction costs.

“The sugar business saw a decline in sales volume in tandem with a reduction in wholesale demand in the domestic market. As global markets open up, we expect to recover in phases. Additionally as we focus on our product diversification plan and export markets, we aim to increase the utilisation rate of our sugar refinery in Johor to 50%,” said Haris.

Overall, the group expects the business environment to remain uncertain and volatile.

Haris commented that the group’s financial performance has substantially improved, although its overall performance was affected by the coronavirus pandemic which continues to spread globally.

As a result of efficiency improvements in its operations FGV managed to normalise its FFB and CPO productions after a slow start this year, despite losing unharvested FFB of 79,000 tonnes in Q2 due to the movement control order, he said.

Meanwhile, Bernama reported FGV is projecting CPO prices in the range of RM2,400-RM2,600 a tonne. during the second half of the year, a moderation from the strong prices ranging at RM2,700-RM2,800 a tonne currently.

source https://www.thesundaily.my/business/fgv-to-consolidate-consumer-brands-under-new-fast-moving-consumer-goods-division-JN3609038