Felda Global Ventures on track to join global top 10 agribusiness firms

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FGV recently completed its purchase of Pontian United Plantations to strengthen its upstream and processing activities (photo credit: FGV).FGV recently completed its purchase of Pontian United Plantations to strengthen its upstream and processing activities (photo credit: FGV).FGV recently completed its purchase of Pontian United Plantations to strengthen its upstream and processing activities (photo credit: FGV).

By Kamil Ridzuan

Mention Felda and most people will think of the country’s 112,635 smallholders engaged in oil palm.

Established in 1956 to resettle the rural poor into newly developed areas and to organise smallholder farms growing cash crops, the statutory body has grown into a diversified plantation giant. However, Felda was also viewed as a lifeline for ageing settlers and their family members span three generations and number roughly around two million people.

That perception has been further enhanced today. The government-owned Felda or Federal Land Development Authority decided to list its commercial arm, Felda Global Ventures Holdings Berhad (FGV), on Bursa Malaysia in June 2012. It was the second largest Initial Public Offering in Asia and the third biggest in the world after US social media giant Facebook and Japan Airlines, a development which put Malaysia firmly back on global investors’ radar.

The listing exercise was part of an effort to dispel the somewhat outdated image of settlers toiling away at their land and replacing it with one of a dynamic firm that could join the ranks of world class agriculture business firms.

Top ten agribusiness firm by 2020

FGV Group President and Chief Executive Officer Mohd Emir Mavani Abdullah is a man on a mission.

Marking his first year at the helm of FGV in July, Mohd Emir (pic) is focused on transforming the Group into one of the world’s top ten agribusiness firms by 2020. With FGV currently ranked in the top 20, this goal seems to be within reach, especially with the dynamic team he has to make this vision a reality.

“We are very optimistic about FGV and look forward to the years ahead. We are committed to propelling the Group forward in order to become a global player. With our myriad of internal initiatives, we trust that once we have completed everything, we will see more reduction in costs as well as greater operational efficiencies.

FGV also utilises only the latest and more innovative Information Technologies to realise operation efficiencies, with the company currently using SAP ERP (Enterprise Resource Planning) for its core business processes. Business Circle understands that the company is also looking at further optimising its operations within the areas of operational excellence, upstream (refineries), high performance and for purposes of inorganic growth to better streamline and optimise operations. The company is also looking at I.T. as not just a support function but as a strategic operations enabler.

“We are working hard to ensure that FGV is part of the world’s top ten agribusiness players by 2020, and a leader in the sectors of palm oil, rubber and sugar – from planting to processing, logistics to exports,” Mohd Emir told Business Circle.

Prudent investments

Along with his team, Mohd Emir has come to a realisation that in order to make it among the world’s top ten agriculture firms, FGV has to expand both its upstream and downstream operations.

It is towards this end that FGV is constantly on the lookout for various expansion opportunities, either via organic means or through mergers and acquisitions.

Last October, FGV completed its purchase of Pontian United Plantations which has land in Sabah as well as in Johor for the price tag of RM1.2 billion. The move is set to strengthen FGV’s upstream and processing activities.

Becoming one of the world’s top ten agriculture business firms

To emerge stronger and leaner, FGV is also looking into divesting its non-core and non-performing operations by the year-end to enable it to focus on being a fully integrated plantation player in the palm oil, sugar and rubber sectors.

“It is our aim to focus on our core business in our effort to go global, thus the disposal of our non-core assets will assist us towards this goal,” said Mohd Emir.

At the rate FGV is growing, it looks like it is on track to becoming one of the world’s top 10 agriculture business firms that include Cargill and Canada’s Bungee.

For this year, expect announcements on further expansion in its oil palm, rubber or sugar cane activities in Myanmar, Cambodia, Malaysia and Indonesia. FGV is also looking into purchasing more land, setting up rubber processing facilities in Myanmar and expanding its cooking oil business in Asia.

FGV manages 138 estates and over 400,000 hectares of palm oil plantations, owns 72 palm oil mills, 13 refineries, 11 rubber factories, 10 bulking installation, two oleochemical plants and one biodiesel plant.

As the world’s largest crude palm oil producer, FGV churned out 3.3 million tonnes last year to account for seven to ten per cent of the world’s output.

It has more than 200 subsidiaries and operates in 12 countries. In 2013, FGV reported a revenue of RM12.57 billion and a net profit of RM980.99 million. It also ranks among Bursa Malaysia’s top 30 firms with the highest market capitalisation of RM16.4 billion as at December 2013.
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Tomorrow: FGV Group President and Chief Executive Officer Mohd Emir Mavani Abdullah – his management style and how he leads by example at FGV.

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